Cees Bruggemans: Consulting Economist Bruggemans & Associates
Cees Bruggemans: Consulting Economist Bruggemans & Associates



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The Reinventing of SA

2014-07-09

Barely 20 years ago, SA's power structure went through wrenching change, as Democracy, a Constitution and a new ruling party were adopted and took over.

Since then the wheel has turned, in ways where today we face yet newer realities defining our state of being, and giving new direction and outcomes.

Back in the 1990s, business (or Capital as it is known in certain circles) gave early evidence of thinking it understood the situation. It certainly by and large made up its mind what to expect and placed its bets accordingly, preparing itself for the worst, ever since the 1990 political starting signal that got the ball rolling.

Fearing an activist new government, a hyper-activist labour movement and more external trade competition, a deep business defensiveness manifested itself, as fox holes were dug, in the process triggering and greatly prolonging a deep recession.

On the day of the 1994 election, the worst did not come close to happening, and business had to by and large discover it had prepared for the wrong outcome. Apparently thinking it finally understood the situation, there was another major turnaround in positioning, and the economy joyfully leaped ahead as defensiveness made way for a greater willingness to re-engage.

Risk-taking, at least for some, was back on the table (while others quietly proceeded to migrate elsewhere abroad, seeking greener, less frantic pastures).

It did not take long, however, for it to sink in that things after all weren't quite what they had seemed, or at least that they were different from what had instigated the leap of joy.

Government and organised labour formed an alliance determined to capture the public sector while confronting Capital with major reform agendas aimed at transforming the face of the private economy.

This was ultimately an one-on-one conflict, marked by a so-called trust deficit as two entirely different world views about means and ends collided.

With political and legislative power concentrated in one corner, greatly reinforced by an activist labour movement, pressure was put on the private economy to adjust to changing rules of the governance game.

Even so, the rules only changed slowly, and the adapting economy remained a going concern, just not the outperforming one of everybody's dreams, and badly underperforming in critical areas where change had been destructive rather than constructive.

So far the standard version of events that is then extrapolated straight-line into the future.

As a forecasting model, however, it suffers from a few shortcomings.

One particular stands out, namely, that the power structure became newly frozen. It didn't. It has kept evolving.

Twenty years on from those early heady democracy days in which the demarcation lines were sharply drawn and much unfinished business awaited, we have today much more fuzzy lines, much more dispersed conflict, much less focus and much more reality looking in.

The labour movement is a caldron of competing interests, key unions and government no longer see eye to eye, business and government have deep-set differences (the infamous trust deficit), the business sector in its own ranks differs at times deeply (especially the interests of larger, stronger ones compared with smaller, weaker ones), labour unions and business square off confrontationally and government to its deepest dismay has had to discover that not only has the traditional political opposition consolidated and expanded its reach, but a whole series of new "anti-establishment" parties have sprung up, carved from its own political body and now directly offering virile competition.

Most surprising, however, seeing the numerous poor outsiders not really participating or benefitting from our prosperous modernity (more than half the labour force either being unemployed, discouraged or working informally), these many battle lines here described turn out to be nearly exclusively between SA's many elites and their wits.

This is in so many ways an elitist struggle.

None of this is constructive, in the way differing interests could put shoulder to the wheel and together heave, making the fastest progress possible, such as Europe in the aftermath of war, and Japan in its earlier post-war sprint for growth.

Yet this cacophony of bewildering clashes today is in its own way a key to constructive dealings. The old clarity of purpose may have faded away, but then in its name major mistakes were made. Today, realism is re-intruding, or even only for the first time in places making a hesitant, if notable appearance.

The old diehard revolutionaries, and reactionaries, are still there, on all sides, but they are no longer hogging the country's centre stage quite so convincingly as they once did.

But then in good times, still relatively unbloodied, it is perhaps easier to dig in and engage in dog fights, compared to bad times with the promise of worse to come, when the more clear- and dry-eyed can see writing on the wall they don't like.

It may be that some platinum miners think they won a great victory this year, but many more workers throughout the economy may think about that somewhat differently. By all means engage, even strike, but when offered a reasonably good deal take it and don't sacrifice all the offered gains (or more). This may still be lost on some union firebrands, but not all, possibly the greater majority.

Government for long identified organised labour as a natural ally, but things apparently did change once party politicking could take a backseat (post election), with the economy in danger of being run into the ground by divisive union politics, along with state finances and external credit ratings, a vortex to be sidestepped.

Private Capital may be a natural antagonist for a nationalist government, given our history, with transformation ambitions front and centre, until a deep lack of confidence and own inability may force a tempering of the pace.

And business, in engaging with government and labour, can only be forthright about the realities facing it and flowing from actions proposed.

In bad times (and things have become rather strained in recent years, with more so ahead if cooler heads don't prevail), one can see this can lead to unexpected surprises, where single-mindedness of purpose becomes watered down, and a greater common sense resurfaces, for too long absent while too many were really narrowly focused, to the point of destruction.

The test grounds (2014) are mining, engineering and the public sector.

None of this is to suggest that confrontation is off the table, and constructive engagement is the only game in town. All the old animosities are still there, all the old agendas very much present, all the strains visible, in party-politics, between unions, between some unions and government, between business and government, inside business ranks where interests vary, and especially still between employers and unions.

Revolutionary slogans haven't died, large strike demands will still be made, government will still proceed with many of its idiosyncratic agendas, just as much as political competitors will try to steal its thunder, and the easy alliances of yesteryear will be difficult to rebuild.

In some localised areas, real costly mistakes will continue to be made. But in others the very cost of what looms may force different outcomes from what an old extrapolation would have predicted.

This repositioning is part of growing up. Just a pity it took so long, had to be so costly for many, and could not be more thoroughly turned.

But then Rome wasn't build in a day, and we are a complex outfit.
 

Cees Bruggemans
Consulting Economist
Bruggemans & Associates 

Website  www.bruggemans.co.za
Email  economics@bruggemans.co.za
Twitter  @ceesbruggemansLinkedLn





The Reinventing of SA

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