Luminary Award Acceptance Speech: Democratising Capitalism by Bonang Mohale

11/06/2019 | By Admin

Excellencies and
Most Distinguished Guests

At the time that the world is converging and disintegrating at the same, in 2002 Michael Mandelbaum, one of America’s leading foreign policy thinkers, building upon what Woodrow Wilson proclaimed more than a century ago, wrote an illuminating and thought-provoking piece of work, ‘The Ideas That Conquered the World – In the 21st Century’. He argued that three ideas dominate the world in the twenty first century: peace as the preferred basis for relations between and among different countries; democracy as the optimal way to organise political life and free markets as the indispensable vehicle for the creation of wealth. The free market has become the most widely accepted institution in all of human history. The rise of free markets holds the key to a peaceful and democratic future. He charted the course and explained the interconnectedness of ideas, politics and economics.

Of course, there is no country in the world that practices capitalism in its purest form. Capitalism’s great historic strengths has been its ability to reform and change shape as social needs and democratic demands shift. Democratising capitalism is precipitated by the fact that our country and our political economy appears to be grinding to a slow halt. The institutions on which this political economy is built are crumbling and standard economic concepts and methods seem inadequate.

Looking self-critically at our present, comparing the world we now know against the world we imagined we would be in – at that poignant moment in the history of this country as we queued and voted for the very first time – the South Africa we have all been praying for- the South Africa of Rolihlahla Nelson Mandela’s dreams- there is no doubt that, collectively, we have not succeeded in eradicating the legacy of apartheid and the 350 years of colonialism; the economy is on its knees; young black graduates roam the streets, hopelessly; inequality has widened; racism is at an all time high; public schooling is broken; public hospitals fail the poor and vulnerable; crucial infrastructure is in decay; lawlessness is epidemic, etc. – not just to explain it away, mask it nor defend it.

Martin Wolf, in the Financial Times, 19 September 2017 article, “Democracy and Capitalism – the odd Couple”, argues that we are making a bad job of reconciling the tensions to hold this marriage together. He opined that Democracy is in recession. After spreading across the globe between the 1970s and early 2000s, it is in retreat. Also in retreat is the belief in a liberal global economy. Larry Diamond of the Hoover Institution has propounded the idea of a “democratic recession”. Roberto Foa of the University of Melbourne and Harvard’s Yascha Mounk have referred to “the democratic disconnect”, pointing to a depressing loss of belief in democracy in the US and Europe. In its latest annual report, Freedom House states that “a total of 67 countries suffered net declines in political rights and civil liberties in 2016, compared with 36 that registered gains. This marked the 11th consecutive year in which declines outnumbered improvements.” In brief, the industrial revolution has ultimately led to a political revolution, from autocracy towards democracy. Moreover, periods of globalisation have been associated with the spread of democracy and periods of de-globalisation with the reverse.

Harvard’s Benjamin Friedman has argued, that periods of prosperity strengthen democratisation and vice versa. Since 1820, average global real income per capita have risen thirteen-fold and even further in high-income countries. As economies progress, people needed to be educated.
Such changes and mass mobilisation for industrialised warfare, strengthen demands for political inclusion. In reverse, the financial crises that destroyed globalisation in the 1930s and damaged it after 2008 led to poverty, insecurity and anger. Such feelings are not conducive to the trust necessary for a healthy democracy. At the very least, democracy requires confidence that winners will not use their temporary power to destroy the losers. If trust disappears, politics becomes poisonous.

The link is not just empirical. Democracy and capitalism rest on an ideal of equality: everybody may share in political decision-making and do the best they can in the market. These freedoms were revolutionary not that long ago. Yet deep conflicts also exist. Democratic politics depends on solidarity; capitalists do not care about nationality. Democracy is local; capitalism is essentially global. Democratic politics is founded on the equality of citizens; capitalism cares little about the distribution of riches. Democracy says all citizens have a voice; capitalism gives the rich by far the loudest. Electorates desire some economic security; capitalism is prone to boom and bust.

Wolf accentuates this point that the tensions between national democracy and global capitalism can be ruinous, as the 1930’s proved. Yet history also shows that the two systems do go together, albeit uneasily. This is not to argue that all market economies are democracies or that all market economies must be globalised. It is to argue that stable democracies also possess at least reasonably open market economies. No alternative way of managing the affairs of complex societies has proved workable. The aim must now be to manage capitalism so that it supports democracy and to manage democracy so that it makes global capitalism work better for all.

Today, we are making a mess of this marriage. We must do far better. We must force ourselves to move much more from a production and consumption narrative towards a more sharing and caring narrative. We must express hope that the future-oriented dialogue of key stakeholders will create a community of shared interest and, ultimately, one of shared purpose. The ethical basis for capitalism must be that it offers better life chances for a majority of citizens. Thinking of both capitalism and human rights in one breath.

After our sixth ‘free, fair and credible’ national elections on Wednesday, 08 May, and the inauguration of the fourth democratically elected president of the Republic on Saturday, 25 May, it is poignant to remind ourselves as to why we have the best Constitution, by just glancing at the Preamble to the South African Constitution:-

“We, the people of South Africa, Recognise the injustices of our past; Honour those who suffered for justice and freedom in our land; Respect those who have worked to build and develop our country; and Believe that South Africa belongs to all who live in it, united in our diversity. We therefore, through our freely elected representatives, adopt this Constitution as the supreme law of the Republic, so as to: ▪ Heal the divisions of the past and establish a society based on democratic values, social justice and fundamental human rights; ▪ Lay the foundations for a democratic and open society in which government is based on the will of the people and every citizen is equally protected by law; ▪ Improve the quality of life of all citizens and free the potential of each person; and ▪ Build a united and democratic South Africa able to take its rightful place as a sovereign state in the family of nations.

Nkosi sikelel’ iAfrika
May God protect our people.”

We must all, collectively, do much more to eradicate the nightmare and deep horrors that rendered black people and women both victims and survivors – dehumanised, dispossessed, violated, oppressed and repressed. Race and identity still pre-determine one’s social and economic position. Whiteness has been constructed as an opposite of blackness. Social compacting was with white males. Unsurprising therefore, that 25 years after the legal end of apartheid, South Africa remains deeply racist, sexist, patriarchal, misogynistic and xenophobic. Othering and bigotry continue to be weekend braai conversation staples. It was George Orwell who implored us that, “to think clearly, we need to speak clearly.” As long as colour affects life chances, being colour-blind means not seeing reality. To rise above the racism of the past, we must acknowledge it. It is hard for an individual or a country to evolve past discomfort if the source of the anxiety is only discussed in hushed tones. But the South African Constitution sets us a higher standard. The Bill of Rights holds all equal, outlaws discrimination on any grounds and protects the right to dignity for all.

Freedom of opportunity and freedom from domination, with individual agency and a stake in the economy, with own capital, is the very least we can guarantee. What then are the sources of wealth in our historical context without large transfers of land and asset ownership, because only 5% of our people own individual land and more than 80% have absolutely no assets? History is replete with examples that ‘an economy inherits a system of power relations’ where natural resources are exploited for both economic and political purposes.

What then should be the role of government?

When other countries boast transformative interventions like sovereign wealth funds; education coupons; reparations; Basic Income Grants; etc. In South Africa, poverty still has both a black and feminine face. We are still struggling with the moment of integration where identity has moved, where the Japanese have been conferred ‘honorary whites’ vs the Chinese having been conferred ‘not whites’ status – co-mingling has replaced the Immorality Act – the English & Afrikaners merged into white.

Momentum for a better life for all must be maintained! Most people just want to see incremental progress and also want to share in that momentum and progress. Again, history is a good teacher with attempts at various moments. The State of Alaska still sends everyone a cheque once a year. At the end of the USA Civil War, dealing with the fact that the Constitution allowed slavery, in 1865, Gen. William T. Sherman made the promise that would come to be known as the “40 acres and a mule” – redistributing a huge tract of Atlantic coastline to African Americans recently freed from bondage – as a way of compensating them for suffering under slavery and other forms of racial injustice. President Abraham Lincoln and Congress gave their approval and soon 40 000 freed women and men in the South had started to plant and build. Within months of president Lincoln’s assassination though, president Andrew Johnson rescinded the order and returned the land to its former owners. Congress made another attempt at compensation but Johnson vetoed it. When the Northern Army moved through the South freeing slaves, the ‘Hatchet Law’ was enacted, with the dictum, “walking man with a hatchet, who could cut a tree & turn right”. In Britain, Margaret Thatcher gave council houses to workers; East Germans were given tangible economic benefits as some kind of reparations; Malaysia’s “Bumi-Putra” were intentionally included in the economic mainstream thereby transforming their quality of life. In some European countries, ‘Baby Bonds’ are given at birth to encourage having more children to fight the real risk of aging populations.

Land is the first means of production. Government must ensure a thriving property-owning democracy that is underpinned by home ownership by all – in control of their own land and
therefore, their own destiny where asset ownership, as part of belonging to society is guaranteed. We must be quite purposeful about how we think deeply about our ‘Pre- Redistribution’ past and why ‘Distribution’ must be completed in our life time, in order for our children to thrive in a ‘PostRedistribution’ epoch. We must boldly and decisively deal with this dilemma between our painful past and hopeful future. We must do more to reimagine and develop our own language and meaning of productivity, value addition and returns.

What then should be the role of labour?

Wouldn’t it be fantastic when labour can really care about what is in South Africa’s best interest and global competitiveness – thereby free itself of ‘ideology for its own sake’ and genuinely be concerned about the wellbeing and resilience of its own members in the long term! To a large extent, labour is already an employer and shareholder in most companies through a plethora of union-owned investment companies and the GEPF, that ‘owns’ the PIC – the biggest asset manager in the continent – with about R2 trillion assets under management (AUM)! With such an arsenal, labour can genuinely drive infrastructure investment and transformation of the boards of directors and the executives in this country. Instruments like ESOPs and shared prosperity can be a palpable reality for the majority of workers – transforming ordinary workers into serious economic players – active participants vs passive recipients, producers vs consumers and givers vs takers – to give real meaning to a shared sense of prosperity and wealth. Where globalisation has undermined local communities, labour can be a powerful mitigating agent.

There are instructive lessons offered by the French Revolution that gave the world the three famous ‘freedoms’, namely, Liberte’, Egalite’ & Fraternite’ – liberty, equality & fraternity! For us liberty is our ‘long struggled for’ freedom – freedom of speech, association and freedom from hunger. Equality of individuals and in particular ‘relational equality’ but most especially the power relations around the place of work- it is the last one that is the most profound for me – fraternity- brotherhood – this notion that ‘we care about each other and one another’. It is hugely premised on trust – the reliance to do what I said I would do – that I believe you deeply care about my interest. Polynesian Society accorded status on what you contributed rather than just what you have.

What then should be the role of business?

It was Marcus Aurelius, Roman Emperor and Philosopher that opined, “We ought to do good to others as simply as a horse runs, or a bee makes honey, or a vine bears grapes, season after season, without thinking of the grapes it has borne. The definition of a successful company is one that develops a corporate soul – not just a group of people gathered together for a joint commercial purpose. This is much more than the sum of its many and varied parts. It is the ethos that drives it and makes it special. This requires not only doing right by the business but also the societies in which it operates. John Naisbitt, American Author, accentuates this point, when he said, “The most exciting breakthroughs of the 21st century will not occur because of technology but because of an expanding concept of what it means to be human.”

Politics determines economics. The role of business, therefore must surely be to survive; deliver SHARED value; deliver on what it says and promises; do no harm; make the world a better place; give the world ethical leadership and true engagement AND grow our own timber by taking education much more seriously. Leadership is about mustering courage to shape one’s sense of character and making a difference – being able to lead and persuade others as to why change is needed – why tomorrow, on a composite basis, will be substantially better than today- that the pain of change will be much less than the pain of staying the same – how our common humanity could benefit from the desired outcomes and why the effort is worth the investment of sacrifice,
dedication and resources. Leadership is about having a compelling vision, courage and integrity – it is about helping our people to be better able to see around corners – to always ask the question, ‘so what else is missing.’

‘Business is no longer on the periphery of development’. It is intricately intertwined with society and its citizenry role. Business must do well by doing good because it cannot continue to be an island of prosperity in a sea of poverty. Broader societal issues of justice, fairness, equality and peace are at the core of business and its desired outcomes. Business must adopt socially responsible, transparent and values-led practices with all its stakeholders. Business and sustainable development are now one and the same thing. Business cannot continue to be indifferent to the plight of the most vulnerable. Business must be deeply committed to ethics, integrity, respect and moral values – it must be committed to ‘doing the right thing’. It is Archbishop Emeritus and human rights activist, Mpilo Desmond Tutu who accentuated, “If you are neutral in situations of injustice, you have chosen the side of the oppressor. If an elephant has its foot on the tail of a mouse and you say that you are neutral, the mouse will not appreciate your neutrality.” There is a need to restore trust, faith and confidence in business ( and government). Business must work much harder. What a strange and wonderful change that would be.

By His grace, love and mercy, I thank you!