ANC and DA line up behind semi-socialist National Development Plan

FA Hayek dedicated his book The Road to Serfdom to "the socialists of all parties". How prescient he was! Endorsement of the National Development Plan (NDP) across the political spectrum and by business suggests faith in central planning is now the dominating ideology of the South African political and business establishment, writes John Kane-Berman of the Institute of Race Relations in an article in Business Day.

Democratic Alliance leader Helen Zille confirmed this when she said in 2011 that the NDP pointed to "an emerging consensus at the nonracial progressive centre of SA’s politics".

The centre may be "progressive", but to claim that the NDP is nonracial is to overlook its desire for "more robust" monitoring and enforcement of the government’s racial preferencing policies. The NDP is not socialist in the sense that it advocates nationalisation (no doubt one reason why the Congress of South African Trade Unions is hostile). Thanks to the successful privatisation pioneered by Margaret Thatcher, accepted by the British Labour Party, and copied by China and others, nationalisation for ideological reasons is generally a thing of the past — although it can happen in South Africa via the Expropriation Bill.

But the NDP steers clear of privatisation, even though it is the solution for failing state-owned enterprises, among them South African Airways and Eskom.

Like all collectivists and planners, the NDP shows little faith in markets, and not much understanding either. It thus claims that "efficient market policies" embrace "principles of social justice, empowerment, and a balance between rights and responsibilities". Subordinating markets to such principles automatically makes them inefficient. It also invites manipulation by politicians and regulators eyeing the next election and the interests of the ruling party.

The NDP acknowledges the importance of the private sector in providing jobs and investment. It wants a "thriving private sector" that invests in productive capacity. But its equivocal approach to deregulation of small business and the labour market, along with its support for racial engineering, is unlikely to stimulate investment.

Indeed, despite the NDP’s lip service to the private sector, its faith is in the state. This includes the state’s ability to "pick" winners in agriculture. The NDP can’t even leave people free to earn an income from home, but wants a "clear policy on home-based income generation".

Even though it acknowledges that "there is a real risk that SA’s developmental agenda could fail because the state is incapable of implementing it", it says the state must bring about rapid transformation via "active, intensive, and effective intervention in the structural causes of economic or social underdevelopment".

The document seems oblivious to the risk that these interventions in pursuit of its goals of reducing inequality and eliminating poverty may undermine the objective of pushing economic growth up to 5.4%, fixed investment up from 17% to 30%, and reducing unemployment from 25% to 6%.

The NDP’s "developmental state", dedicated to "active, intensive, and effective intervention", is not a liberal state, but a semisocialist one. And its ambitions, none of which is costed, know no bounds.

Its proposals thus include a huge expansion of tertiary education; minimum living standards for all; "regulating climate and disease"; more than 20,000MW of renewable energy; a national health insurance system; "catalytic interventions" in "relentless pursuit" of "special transformation"; gender parity on political parties’ electoral lists; and enlisting celebrities to help promote physical activity — including getting everybody running, walking, cycling, or playing team games every second Saturday.

This last is reminiscent of the opening chapter of George Orwell’s novel, Nineteen Eighty-Four, in which Big Brother monitors Winston Smith as he does his Physical Jerks in his flat in Victory Mansions.

The NDP is a fundamentally flawed plan bound to fail in generating 11-million new jobs by 2030.

But the African National Congress has done a brilliant job in getting the business community, much of the media and the official opposition to endorse it. Whether business will now put its money where its mouth is, is another matter.

• Kane-Berman is CE of the South African Institute of Race Relations.

Relevant legislation and references:
Draft Expropriation Bill
National Development Plan