I think that the last time that I spoke here they made the choir stand here for the duration of my speech. I was under enormous pressure to finish very quickly because I was particularly aware of that last row, precariously poised, and that could fall any moment, if I became too boring. I'm very happy that they have allowed you to sit this time, so that the pressure on me is less. Nonetheless I will try to be very quick, because I think that they have given all of our guests here an appetizer and I'm sure they want Minister Müller and myself to finish very early, so that they could listen to you.
I think that I'm dealing with a topic that is very important but less exciting than the last one. The last one I spoke about was: How do we make this Western Cape - and indeed the world - a home for all? How do we deal with the politics of inclusivity, the politics of identity, the politics of belonging - and how do you do this at the level of religion, how do you do it at the level of race, how do you deal with migration, particularly across Europe and so on? And how do you build inclusivity and how indeed do you overcome the problems when fundamentalisms clash - whether it is the fundamentalisms of the East or the fundamentalisms of the West - and how to deal with the fall-out of the clashing fundamentalisms?
I think the discussion tonight is a lot more grounded. The discussion tonight in a sense goes to the material roots of what creates exclusivity or what can create inclusivity. And that is the notion of the economy. How do we deal with the world economy? And particularly, how do we deal with national economies in ways that create the bases for inclusivity rather than marginalization and exclusivity. I must start off by saying that what nations can do becomes a lot more limited when their economies are globalised.
Before, when an economy was uni-dimensional, you could in a sense choose between whether you like the capitalist mode of production, or whether you like the socialist mode of production. I think that in a fairly uni-polar world, you've got to ask yourself the question: "What do you do within the context of a dominant market economy?" You cannot, in a sense, speak about economies outside of that dominant market-driven mode. And to an extent, if China is anything to go by, the discourse has shifted from the market as the enemy to the market as a facilitator of growth. The questions then begin to change. The question is: how do you put the market at the disposal of the most vulnerable? How do you put the market at the disposal of the poorest of the poor in the world, so that indeed we are able to make sure that no one is excluded.
The truth of the matter is that globalization has to a large extent become a power that has demonstrated a lot more exclusion in the world. Entire continents, like the African continent, remain excluded from globalization. There are entire countries, particularly those in the South, who are excluded from the centre of globalization. And then there are communities within countries, whether in the North, whether in the South, whether in the East or whether in the West, who are excluded. To a large extent fundamentalism feeds off the economic exclusion of marginalized communities, whether they live in Britain, America, Germany or where ever else; exclusion from the economy is the basis for inclusion into terrorism, into fundamentalisms, into ideologies of certainty. Thus, what we are fighting for, is a globalised market that would rather include than exclude.
And so the debate is no longer about communism or capitalism. I think the debate is how to make the market do what it needs to do to include rather than exclude. And it is here that the two key variables of the debate are brought to the centre - and those two key variables are, on the one hand, growth, and on the other hand, distribution. So you are no longer speaking about capitalism or communism; you are speaking about how to remove the tension between growth, on the one hand, and distribution, on the other hand.
And I think this is what we have not gotten right in the world; we've not gotten it right in South Africa - and the question is: can you get it right in a country, if it is not gotten right at a global level? Can you determine that you will have good distribution and growth in South Africa if, for example, trade agreements at a global level don't allow South Africa and African countries and the countries of the South an equal footing on which to compete for world markets. If they tell you that in South Africa you must drop your tariffs and simply open your markets to any goods that come in, but the French continue to subsidise their cows, can you do it? And that I think is the enormous tension to resolve. So, the key thing is how you deal with these two variables: growth, on the one hand, and distribution, on the other hand.
Gloucester, a character in Shakespeare's King Lear, had a very simple approach. He said that distribution should undo excess and all shall have enough. That is the ideal. Gloucester would have understood that, whatever may happen in the global economy, distribution - the way you distribute the benefits of growth, the way you distribute the fruits of a society -should in the first instance undo excess. That way, if you have too much, you should "undo it" in order to distribute it so that "all shall have enough". That's the ideal. And if we can all accept that - what ever perspectives we adopt - that distribution is the primary method of undoing excess and ensuring sharing across society, then I think we probably have a common point of departure. It is often when you don't have that shared point of departure that you have the clash and the tension across the world between societies, between continents and within countries between communities. So let us except Gloucester's thesis that distribution should undo excess, so that all should have enough.
I think that what the world struggles with today is the way in which we take growth and we take distribution and far too often set them up as binaries opposites; we put them up as polar opposites. For example, Argentina learned a major lesson up to the crisis, because Argentina - using the prescripts of the World Bank and the International Monetary Fund - focused entirely on growth.
They focused so much on growth and they had rising growth rates and paid absolutely no attention to issues of distribution. They obviously did not read King Lear. They paid no attention to distribution and perfected a model of growth and missed the underlying tension that was building up in that society. Until the crisis hit and the World Bank could not save them. Transfers of money from America could not save them. Transfers of money from the IMF could not save them. Nothing could shore up the fundamental instability in Argentinean society and the crisis ruptured. I deliberately did not use a successful capitalist country as an example to speak about the trickle-down effect. I particularly wanted to use a Latin American country in order to illustrate the point that I am making, namely that when you are focused one-dimensionally on one of those variables, in this case growth, you create such levels of exclusion that it leads to the kind of crisis in society that we saw in Argentina.
Of course, I think that Brazilian society was facing much the same kind of thing with the creation of these massive elites in society. There were few beneficiaries of a growth-led economy, but in that case the social crisis and the economic crisis was averted through the election of President Lula, who held out the promise of distribution. And he just won another term, because he was able to persuade Brazilian society that this market is a tough thing. To get the kind of redistribution he wants is a long-term process. Let us be patient, he said, and he won another term. And so, if he does not start getting the distribution process right in Brazil, then its crisis will also come knocking.
On the other hand, a similar tension can arise in society if you take your eye off the ball of growth, when you don't focus on growing the economy, but you try too much and too unilaterally to focus on distribution. Many people personalize the tensions in Zimbabwe and the problems of Zimbabwe by saying Oh, Mugabe is bad. Many people think that it is simply a problem of corruption. Zanu PF is corrupt. Many people characterize Zimbabwe simply as a lot of banditry and lawlessness, but while those may be elements, they are certainly not causes.
They are symptoms of something more fundamental that has gone wrong in that society. And what has gone wrong in that society is that Zimbabwe has tried to distribute what it didn't grow. They distributed free health care, they distributed free education, free welfare for this and welfare for that in their first twenty years of liberation, so much so that they distributed only what they borrowed. They distributed only what they got in aid and invested very little in the productive capacity of the country in order to facilitate an independent growth path for themselves as well. And the ruptures in society came when the international community, the IMF and the World Bank, began to close the tap of lending, of borrowing, of aid, and Zimbabwe had nothing more to give to the people. No more free health, no more free welfare, no more free this, no more free that - and suddenly you began to see the implosion of a society that had distributed what they did not grow.
So, if Argentina is lifted out as an example of the extreme of a growth path that excluded distribution and only created elites until it ruptured in that way, then Zimbabwe is possibly the example and the extreme of a country that distributed without growing.
It is in that context that I think that the discussion that we are having today about shared growth becomes relevant. Because the fundamental thesis is that you cannot grow without sharing (as in Argentina) and you cannot distribute what you have not grown (as in Zimbabwe).
And so the point is that shared growth has become the new discourse for countries like South Africa in order for us to avoid choosing any of those two extremes and finding a middle path in which growth and distribution are fused. And so we find that even in advanced capitalist societies, like Britain - I think that Germany may have displayed some elements of this - that where they have pursued a growth path because of their resources, they often tried to compensate by effective distribution to the lower ends of society, the poorest of society, through the creation of two 'states'. One, a growth-oriented state for the wealthy and a welfare state for the poor. And so, in a sense, they have tried to find other methods of some distribution within the context of a welfare state.
But that has its own problems, because it also dehumanizes in its own way by making people dependent, by blunting the productive capacity of ordinary citizens and making them wait for the next pension queue, for the next welfare queue, for the next unemployment fund, etc.
And I think that to a large extent what we sit with in South Africa is an attempt to find a formula for shared growth with elements of a safety net. But without extending and deepening that safety net to such an extent that entire layers of society are rendered unproductive and they lose even the hope of wanting to participate in the economy, and become so absolutely dependent on the state that they abdicate all their life's ambitions to what the state provides. And whatever the pros and cons of the technical debates are around the basic income grant, the philosophical point of departure has to be a fundamental question - what path do we want to put South Africa on?
And that is why we have only come with elements of free education thirteen years after democracy. We have decided not to go the Zimbabwean route by giving free education from the outset. It is only now that we are beginning to say, Let's get the poorest 40% of schools not to pay any fees. That is why we introduced free health care first to the most vulnerable children under six, and to pregnant mothers. We sent out that signal right at the beginning. We would not otherwise be in the good macro-economic situation that we find ourselves in today, because we would have lost the battle in the attitude of our people, in the philosophy of our nation and in the orientation of the poorest of the poor.
And I think that that becomes the critical thing in all of the debates that we would need to understand. And so this idea of shared growth isn't simply a mechanism of letting one part, the first economy, get on with the basis of growing and reaping the fruits and participating in the global economy and making money and creating elites, while on the other side you create a welfare system for the poor. That dichotomy is a dangerous dichotomy in society. And so the question then emerges: what is this notion of shared growth?
I think that the difference to that dichotomous society of an advanced capitalist state and a welfare state for the poor is one in which you understand that the fundamental aspect to a nation has to be that it grows its economy on the basis of good macro-economic factors: monetary, inflation, interest rates, all of those things. You don't compromise on these things. But also that you build into it the elements of sharing. You don't add onto it the elements of sharing, because that is the dichotomous society - that is the pre-1997 society. You build into it, you structure into it the elements of sharing, and that means therefore that on the input side of growth you build in sharing, as well as on the output side of growth. So what goes into your economy speaks to the intention of sharing and what comes out of the economy is shared.
The fact of the matter is that you have got to create an entrepreneurial orientation on the input side of growth. People who have the drive to participate must have the knowledge to be entrepreneurs. But in South Africa they also have to have the attitude to be entrepreneurs. And in South Africa this is particularly difficult. The question that we ask ourselves is: If we've got this fund and that small business fund and that red door and this assistance and this bank thing and that bank thing, why aren't we getting it right? Because it may appear on the face of it that we have the resources to give people the knowledge to be entrepreneurs and maybe even the kick start to be entrepreneurs, but why aren't we doing it?
Because fundamentally you cannot have been told for three hundred years of colonialism and then apartheid that you are no good, that you are second class, that we are not investing in you, that you are only good to be carriers of wood and drawers of water, and so on. And then suddenly ten years after democracy, confident blacks step forward and want to take their places in the boardrooms and want to take the economy by storm and so forth, because the greatest crime of apartheid was to rob us of our self-confidence. And you can see this every day: a matriculant who is white and has grown up with a lot of things comes to an interview with so much more confidence that you are tempted to employ them without even any further processes, while a black person with a degree comes in and struggles with his or her own sense of being, with their self-esteem. They give you the right answers, but in ways that don't inspire confidence.
So that is the deficit. That is part of the inputs of a shared growth model. The skills - how do you transform the schools to give those kind of skills, when they did not even have the teachers to teach maths and science. You can have the intention to teach maths and science, but not every school has more than one teacher who is trusted by the learners to teach you maths and science correctly. And if that is a prerequisite for the confidence to participate in the economy as engineers, for example, then if a school doesn't have a decent maths and science teacher, you are not going to build the shared growth inputs - and that is where we fall short. There is the aspect of material support, there is question of the access to assistance on the input side of growth that we've got to get right.
And then on the output side of growth, you've also got to make sure that what comes out of the economy is also shared. For example, the basic way of sharing is that the state is able to put in place services, so that the first way in which people experience the sharing of this economy is that they know that they have got a tap from which clean water will come, they have got a flush toilet, and that they have got electricity, and that they can switch on the lights and so on.
The second thing is that human settlements and transport systems must make people feel that they are not thrown out to the outskirts of the city and physically excluded as well. Because that is what is happening in South Africa, the Khayelitshas, the Mitchells Plains and so on are all on the outskirts of the city. There is the physical exclusion that goes with the economic exclusion and the social exclusion. And so human settlements and services must become an absolute first base of the sharing of that economy.
Then there has to be the sharing of the wealth of the economy as well as the ownership of the economy. Many people look at black economic empowerment as a dangerous thing, as an aberration, as an artificial addition to the economy, but the fact of the matter is that unless you are also going to deliberately include - to undo what was a deliberate exclusion - you are not going to be able to get shared growth going. And then you also have to make sure that the most basic way in which this inclusion in the economy and sharing of the economy occurs is through employment.
However, the context that South Africa finds itself in is that, just as we made the transition from apartheid to freedom, including the freedom to participate in the economy, the world made a transition from labour-intensive to technology-intensive methods of production. So now suddenly we have millions of young people who only have their muscles to offer, because the schools taught them nothing about the skills and the brain power to operate a global economy. They thought that they would enter the new South Africa, putting their muscles on the line on farms, in mines and all of those kind of things, suddenly we've got to give them the bad news that you no longer need to use this, you've got to use that. But nothing in their lifetime has trained them to use their heads, to use their skills, to rely on maths, and so the exclusion is also one that takes place at the level of employment.
And so, in the transitional phase we must get all of those things right, through expanded public works programmes and giving people exposure to this economy, even for short periods, just so that they know what it requires. We need to get the learnerships going and to try and fast-track post facto the skills deficit that we are faced with. You've got to build enough of a safety net, but not too much of a safety net, because too much of the safety net will mean that no one will go for the upgrading of skills, no one will go for participation in expanded public works programme opportunities, etc.
So what I have done today is try to problematise this notion of shared growth, to tell you that we think we know where we want to go to. But there are two factors that inhibit us from perfecting or even implementing in practice all of these good ideas that we have. The one factor is that we are inextricably locked into a global economy that determines things for us. That even where we can participate, as in the clothing and textile industry, we are not able to get it onto the markets because China is able to do so a lot more cheaply. In fact, China is able to do this so well that they are even wiping out the domestic market for our clothing industry. So what do you do with 60 000 clothing workers still left in our economy, with their families, who face a wipe out if we don't do something drastic.
So you are operating in a hostile global environment; you've got to transform your economy. And the other thing is that we are not doing this like other countries which are responding to China/India and to protectionist policies that are in place in Europe. We are not doing this on an equal basis; we are doing it from a deficit that we've got to get right. And that is the challenge that we face. So shared growth remains an ideal, something that we work towards every day. We get elements of it right every day. We learn by trial and error. We are able to basically survive and get things going, and we've got enough of a safety net to tell the most vulnerable that we can tide them over the most difficult times until we get it right.
But the fact of the matter is that partnerships are needed, at civil society level, such as between EFSA and Tutzing; at a sub-national level, such as between the Western Cape and Bavaria; at national levels between South Africa and Germany; at continental level such as the European Union and the African Union. Those all become critical integrated elements of getting the notion of shared growth right.
The difficulty is that you've got to get it right, at all levels, simultaneously. That I think is the elusive nature of shared growth. But I think that there is no other show in town except shared growth. You must avoid the sirens who call only for a narrow growth, just like you must avoid the sirens, however much you may love them, who call only for distribution. Because both those sirens take you down difficult paths: the one like Argentina, the other one like Zimbabwe. And those of us who stand in the middle of those extremes need to strengthen our backs. And those who don't want this disfunctional society must make sure that at the multinational level, at the international level, they invest in shared growth and try to make it work.
Thank you very, very much.
