HOW STATE CAN BOOST ECONOMY
In its election manifesto the ANC has committed itself to establishing a developmental state.
In an interview with Sowetan, South African Communist Party deputy general secretary Jeremy Cronin, pictured, explained that the kind of a developmental state that his party and the left within the ANC envisages was one that comes up with a developmental plan and utilises its natural resources to create jobs that are sustainable and match the profile of its labour resources.
According to Cronin, the envisaged state will be different from the one that had adopted the Growth Employment and Redistribution (Gear) macro-economic policy during former president Thabo Mbeki's era.
Cronin says that under Gear some "neo-liberal assumptions were made that the government does not create jobs but the market does".
The government's responsibility then becomes to create an atmosphere where business will flourish and create needed jobs.
Cronin argues that for the prerequisite atmosphere to be created government had to liberalise the South African economy by getting rid of "impediments" like exchange control.
On the other hand there was a drive to privatise state-owned enterprises such as Eskom, Telkom and Transnet to attract foreign investment.
History shows that although Gear did manage to stabilise the economy South Africa hardly saw an influx of foreign investors. Instead more than a million jobs were lost under Gear.
Cronin points out that it is the failure to attract foreign investment that saw Eskom failing to invest in its infrastructure, resulting in the load-shedding that the country has come to experience.
In supporting his argument, he uses an example of what should be the mandate of state-owned enterprises in a developmental state.
"For the centrist within the ANC will see Transnet mandate to be running a cost-efficient railway line that makes transportation cheap for business even at the expense of the rural communities where railway lines have stopped operating," argues Cronin.
For the left, he says, the Transnet mandate will be that it should provide an efficient public transport system.
The principle is that the cost-benefits should be all encompassing and not only be enjoyed by a certain sector of society.
One of Gear's key shortcomings is that although the country did achieve some economic growth (between three and five percent) it did not create enough jobs to sufficiently absorb labour.
One intervention that the developmental state seeks to make is to create jobs for this unskilled labour reserve.
"What is important is that people must be in jobs, these may not be high-paying jobs, but they should be jobs that pay a living wage," argues Cronin.
He also believes that the government can create jobs by employing more police officers, social workers and teachers.
On the other hand, the government could ensure that major projects like 2010 do indeed create jobs and develop local skills.
This should not be done in the form of narrow black economic empowerment where multi-nationals buy a black face while using cheap labour provided by labour brokers, says Cronin.
The overarching feature of a development state is planning.
Cronin says there are discussion within the tripartite alliance about setting upa planning commission in the presidency.
The body will comprise state officials, labour and business.
Its responsibility will be to plan the government's overall programme as set and guided by its industrial policy.
Such a policy will focus on using the country's resources in a manner that is cost-efficient, and the cost-benefit of which should be enjoyed by all South Africans.
The body will, among others, direct that allocation of funds in strategic investments.
According to Cronin, the thinking is that the treasury should be "a vigilant financial manager that determines the size of the envelope but does not necessarily do the allocation".
One thing that the developmental state is not married to is nationalisation.
The focus, says Cronin, should be more on improving the capacity and mandate of state-owned enterprises such as the Development Bank of Southern Africa, the Land Bank and so on.