ISMAIL LAGARDIEN: SA has a failed political economy, but it is not a failed state

I have for most of the past six or seven years stood by the claim that SA is not a failed state. My rejection of the claim was always based on a standard set of metrics — the judiciary, police, military, public administration, the delivery of public goods and services, and so on These metrics are drawn from my own research on Somalia and Liberia in the early 1990s and updated, as it were, by conventional measures (such as “fragile states”) published by the World Bank.

Nonetheless, when measured the way I always have, it’s becoming increasingly difficult to retain the belief that SA is not a failed state — with some heavy caveats and disambiguation. I want to put out a speculative claim that SA may well be a failed political economy, and that the state has failed black people, in general. This statement may seem axiomatic, but it requires some disambiguation, especially because it may be “self-evident” in “the economy”.

The difference I point to here is, as readers of this column might by now be tired of hearing, that I don’t see a separation between an economy and society, history and people. There can be no such thing as an economy that is disembedded and unaffected by people and the social relations that hold society together. When viewed this way, the concept of a political economy makes much better sense. I make the claim then that SA is a failed political economy; it is at best a parallel political economy.

Let’s take a step back. Conventionally there is (a lot of) discussion about a “parallel economy”, a “black economy”, a “shadow economy” or economic activity that is “reported or unreported”, and so on. This was touched on briefly in this column a couple of weeks ago. Discussion on a parallel economy draws further on conventional thought that an economic system is made up of labour, capital and land resources, and includes participation (by people) in exchange, production, distribution and consumption of goods and services.

What is deeply lacking and echoed by thinkers such as Meghnad Desai, emeritus professor at the London School of Economics, is history. Orthodox economics, for its emphasis on empiricism (what we can observe through the senses now), is famously ahistorical. When history is factored in, we have to consider the deep division between black and white in SA. In doing so, we are able to make a claim that SA’s political economy (perhaps even the state) has failed black people in general, and that we have a veritable parallel political economy.

This bifurcation is evident in the fact that there are two main groups of people, one of which can afford to pay for privately provided goods and services (medical aid, schooling, home or community security, and so on), and another that has to rely on the state. It is this second group for whom the state has failed, and which makes up the second trajectory of the parallel political economy. We can argue about whether this is a reproduction of apartheid’s divisions, and that it is now economic apartheid, but there is a large black middle class that has access to privately delivered goods and services.

There is now a blurring of lines between private (consumer products), public (street lighting, community safety), club goods (tollways, cinemas and so on) and common resources (timber, water bodies, fish and so on). This blurring is caused mainly by unsustainable divergence in income, and the value of movable or fixed assets. Some people simply cannot afford to go to the movies, gyms or theatre, nor do they have the means to get to fishing waters (unless they live on the coast) or afford fishing equipment.

When all of these are looked at in totality, the state has effectively failed a sector of society by creating, by accident or design, a parallel political economy in SA. It is probably not fair to say that the state intentionally designed a parallel political economy, but if you purposefully and deliberatively expand the middle class — which is, arguably, fundamental for the functioning of a liberal, market or social democracy — an unintended consequence is the creation of a subordinate class.

We have ended up, also, with a stratified subordinate class — a project that will continue — where the state aspires to expand its tax base by growing the black middle class. And so the state’s racial classification system creates a de facto and de jure sliding scale of access and entitlement of white, coloured, Indian and black communities. In this scenario, the ultimate objective is to expand the black middle class, improve its access and entitlements, with “non-Africans” increasingly being moved into subordinate status.

It is not difficult to reach the conclusion of a parallel political economy in which the state has failed to provide public goods and services to one community, while another is able to afford private goods and services. In the meantime, the “project” of elevating Africans and effectively “downgrading” those seen as non-African continues unabated. All of these contribute to that blurring of lines referred to above.

• Lagardien, a visiting professor at the Wits University School of Governance, has worked in the office of the chief economist of the World Bank as well as the secretariat of the National Planning Commission.