Start main page content

Mass economic illiteracy equally poses terrifying risks

- William Gumede

South Africa may have among the largest mass belief in Soviet-style state-centred economics - education is needed on the disastrous impact in post-war Africa.

The widespread embrace by old and young across the political spectrum in former disadvantaged communities of outdated economic policy ideas that have been frozen in the Soviet Union-era, redistribution policies that have failed devastatingly in post-war Africa and poor understanding of the basics of how a business works, whether state or private, poses huge risks for South Africa’s prosperity.

Of all the major emerging markets in the world, South Africa may have among the largest mass belief in Soviet-style state-centred economics among citizens young and old. We often despair about the poor performance of SA’s public education system on mathematics and sciences, which undermines the country’s competitiveness, as these subjects are the fulcrum of development, compared to our emerging market and industrial country peers.

Mass economic illiteracy is not only widespread among ordinary citizens from disadvantaged communities, but is entrenched within the ANC leadership, and because of this widespread in government, and among leaders, members and supporters of political parties that are spinoffs from the ANC, such as the EFF and ATM.

Mass economic illiteracy equally poses terrifying risks to the country’s economic growth, development, and stability. Perhaps, the most vivid illustration of this is a few years when a Cabinet Minister said the ANC leadership did not care about the fall of the Rand currency, because they will just pick it up again, and it everything will be just fine.

The fact that a senior ANC leader can even say this publicly, which reflects a poor grasp of how irrational economic policies, corruption and mismanagement have real-life implications for the country, businesses, and citizens, underscores the economic illiteracy at the highest levels of the ANC leadership and government.

The ANC and its tripartite alliance of Cosatu and the SACP have dominated economic thinking among disadvantaged communities during the last decades of the apartheid and the democratic era. Through the influence of the SACP, ANC economic thinking during the apartheid-era was closely aligned to the Marxist-Leninist economics of the former Soviet Union, which was the SACP’s largest ideologic, material and leadership influence.

South Africa’s liberation struggle wrapped the participants in a bubble, isolated from global economic idea changes, which means that economic ideas of many remained frozen in neo-Marxist-Leninist ideas, even when these had collapsed elsewhere, and the rest of the world evolved.

Sadly, although South Africa in the post-apartheid era, has opposition parties, groups, and entities with a diversity of economic views, beyond that of Marxist-Leninist statist ones, and the country is an open economy, with influences from all economic ideologies, economic thinking among the majority of ANC leaders – and leaders of ANC spinoffs, and most disadvantaged communities remains rigidly neo-Marxist-Leninist.

Perhaps, only North Korea, a society completely isolated from the global economy, thinking and trends, have similar levels of frozen economic thinking as in South Africa presently.

Because of outdated economic thinking, there is a mass appeal among disadvantaged communities of African-style redistribution strategies, whether it is the nationalisation of private companies, expropriation of land without compensation and fostering empowerment strategies in which a select elite of political capitalists, who are not entrepreneurs, get rich solely through tenderpreneurship – living off state contracts.

In the last 60 years, such misguided strategies have plunged most African countries into failed states, civil war and decline to pre-colonial development levels. 

Many ANC leaders and members, leaders and members of ANC spinoffs and South Africans generally from disadvantaged communities because of high levels of economic illiteracy so poorly understand how companies, whether state or private, work.

Because of this, many find it hard to accept that once a state company is corrupted and mismanaged by incompetent political appointees, it often cannot be resuscitated anymore.

In such cases, the costs and time do so, may make it better to close it down or hand it over to the private sector who are willing to take the risks, have the skill set and is not bound by political obligations. Many are also opposed to the private sector providing public services; although the private sector is already doing so where the state has failed, such as filling potholes, and delivering health, education, and security.

The lack of economic literacy has resulted in irrational economic policies which have increased unemployment, worsened poverty, and unleashed social disorder. It is also a fertile ground for economic populism – with populists who are themselves often economically illiterate, promising irrational economic policies, that will compound the hardships of those who vote for them based on such promises.

Public education about economic policy disasters elsewhere, so we do not repeat them, is crucial in all spheres, especially in public media. Sadly, reading, let alone reading widely has plunged. There has to be urgent intervention to lift economic literacy levels across society. Economic literacy should be an essential part of school and higher education curricula, part of workplace induction and part of government development and empowerment programs.

Mass-based community-level training on business, entrepreneurship and economic literacy, will help to improve economic knowledge, and so lead to better quality policies, better individual decision-making and better oversight of elected and public officials over the management of the economy.

William Gumede is Associate Professor, School of Governance, University of the Witwatersrand, and author of Restless Nation: Making Sense of Troubled Times (Tafelberg). This article was first published in TimesLive/Sunday Times.