Does the economy serve the people, or are the people here to serve the economy?
Put another way, do we see the government as running a business where growth is central, or do we see it as running a social enterprise where the degree to which people thrive is central and the economy is there to serve this purpose?
In both cases, balancing the available resources is non-negotiable. But the principles underpinning that balance differ depending on whether you adopt a social enterprise paradigm or a business paradigm.
Obviously, it’s worth considering that even in a strict business paradigm, gone are the days when profit was everything and the will of shareholders was the sole consideration.
To foster sustainability, the UN Global Compact sets out a “three principles approach” in which people, planet and profits are all meant to be considered in any business transaction.
These were the thoughts on my mind as I reflected on finance minister Enoch Godongwana’s recent medium-term budget policy statement (MTBPS).
The media largely gave it glowing reviews, saying the markets received it positively and that it reflected a skilful balancing exercise.
The few dissenting voices, however, were drowned. Among them was the Institute for Economic Justice’s Neil Coleman, who once sang from the same hymn book with Godongwana as a trade unionist aligned to the SACP.
Today, a central point of disagreement between the two is the social relief of distress (SRD) grant, which was set at R350 a month when introduced in May 2020.
Godongwana has now extended the grant for another year at R350 — not a cent more despite rapid inflation due to Covid, the war in Ukraine and soaring food prices. The grant’s future also remains uncertain.
Curiously, the MTBPS does not position the grant as a constitutional imperative or strategic question, even though it is both. Nor does Godongwana link it to an assertion in his MTBPS address that “the strategic goal of this government is to reduce poverty, inequality and unemployment, in pursuit of a better life for all”.
Instead, his statement that “any permanent extension or replacement [of this grant] will require permanent increases in revenue, reductions in spending elsewhere, or a combination of the two” makes it sound like a pestering financial assistance request from a distant relative you helped once and to whom you feel no obligation.
So who is right here?
In answering this, first we must agree on the shared principles for resolving the disagreement.
Our rational choice must be dictated by our understanding of the duty the constitution imposes on the government. In its preamble, the constitution says we adopt it “to heal the divisions of the past and establish a society based on democratic values, social justice and fundamental human rights” where citizens' lives are improved, and potential is freed.
Our finance minister should not design a budget that exacerbates inequity on any front
The Constitutional Court has interpreted this widely, ruling that it imposes an obligation that goes beyond simply eschewing unfair discrimination and incorporating restitutive measures to level the playing field. The court has said social justice is, effectively, a dimension of the constitutional value of ubuntu — so, all government action must conform to ubuntu.
What would the approach to the SRD grant be if Godongwana’s budget conformed to constitutional governance and accountability?
Here it’s helpful to consider the response of a British doctor who was asked what he would do if he were chancellor of the exchequer for a day: “I would not design a budget that exacerbates health inequity.”
Extending that principle, South Africa’s constitutional governance dictates that our finance minister should not design a budget that exacerbates inequity on any front. And this duty incorporates beyond simply reducing existing disparities.
Now the question becomes: does the MTBPS, and its approach to the SRD grant, reflect the constitutional commitment to social justice and equality?
Consider, in answering this, that Stats SA puts the poverty level at 55.5% across all groups — and this is broken up into 1% for whites, 6% for Indians or Asians, 40% for coloureds and 64.2% for Africans. This social stratification is mirrored in the racial demographic of those who have sought the SRD grant.
Can we afford a pathway other than austerity?
One of my roles today is to chair the Cities Alliance, and my immediate predecessor, former British MP Clare Short, once said that “justice is simple — everyone has to be respected equally”.
Short’s argument is that a century ago, someone wouldn’t believe we could achieve a world where everyone has similar economic and social conditions. But, she said, “we now have the capital, the knowledge, the technology, the communications to make it completely feasible to set out to ensure that everyone in the world has the basics necessary to a decent life”.
This includes enough to eat, basic security and essentials such as access to education and health care.
Ninety years ago, US president Franklin D Roosevelt’s New Deal, constructed amid the grave socioeconomic meltdown of the Great Depression, proposed a model of social justice. Roosevelt chose strategic state spending as a way to bridge the inequality gap, investing in people to allow them to climb out of the mire.
Today, in deciding whether we retain a market-centric paradigm or take a transformative leap to an equity-anchored people-centric paradigm, we must decide if government is a business or a social enterprise. What will it be?
* Thuli Madonsela occupies the Law Trust research chair in social justice at Stellenbosch University and is the founder of the Thuma Foundation
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