MBALI NTULI: Business needs to lead the regeneration of an ethical and dynamic state
The private sector is at the core of our economy and we need to ensure that it functions well and is profitable while helping all stakeholders
We live in an age where we seem to conceptualise the South African economy as this broadly abstract Keynesian paradigm which is separate from the lived reality of our existence.
That glosses over the inconvenience of our working poor, while hoping somehow that the same old recycled platitudes expressed ad infinitum in the Medium Term Expenditure Framework will eventually cause our woes to magically evaporate into the ether.
In the post-Covid economy, we now run the risk of engaging in interventions that do little more than rearrange the deck chairs on the Titanic. We need a new economy, a caring and ethical economy.
Our economy is not just made up of nondescript adjectives such as “households” and “firms”. The SA economy is made up of real, living people, stakeholders who count, who matter and whose lives depend on and are sustained by its systemic and structural functioning.
Our government, to a degree, has the power to regulate the interactions we have in our economy through policy instruments to be fair and equitable, to prevent anticompetitive monopolies and to ensure the system of economics it enables supports the wellbeing of our population.
Every economy is a human construct. It functions with intent and it is of our own making. In that narrow band of influence where the government exerts its power, we can create an enabling environment for our citizens to thrive and for the creation of jobs and prosperity.
Executed ineffectively, it can just as easily cause their decline and even encourage rampant corruption.
For us, in one of the most unequal societies on earth, we face the immense task of trying to address what is, in very real terms, consolidated generational inequality. It is a fact, and one so ingrained in the lives of many of our citizens, that it goes far beyond just being an economic concern.
It is an ethical and moral dilemma which can only be addressed by approaching the economic question through the lens of a renewed human empathy and decency.
The challenge this poses is simply that for our society to change, the economy must, too. More people need to share in our bounty and our wealth, just as they often already do in the risks we take to create that wealth.
The values we attach to the economy and policy, and the way we approach both, need to evolve. The economy cannot just be business as usual. In the US and the rest of the industrialised West, businesses and academics are asking the question: What is the purpose of a company?
And as they ask, so the answer of post-war capitalism — that the corporation is there to serve the interest of its shareholders — is being discarded. In our age and with our challenges, that is no longer good enough.
We need to own the discussion about how SA turns the quest for profit, wealth and prosperity into a path that benefits all of our citizens.
Companies and the private sector are the core of our economy and we need to ensure that they function and make profits in a way that does not destroy what exists to build that which does not.
The best way to do this is through considering each stakeholder at every step of the economic value chain, so that businesses do not only serve their shareholders but a much wider community of stakeholders — their shareholders, for sure, but also suppliers, customers, workers and the communities they work in and nearby.
Business needs to lead the regeneration of an ethical and dynamic state. A stakeholder economy is not one in which the profit motive is thrown overboard in favour of some soft and furry alternative but, rather, a resilient, profitable and inclusive alternative to what we have now. We need an economy that leaves no South African behind.
Only profitable companies are viable. Only profitable companies pay good salaries that generate the personal and corporate taxes the state needs. We need to own the discussion about how SA turns the quest for profit, wealth and prosperity into a path that benefits all of our citizens.
The key is to change the way we think and act. From the short term to the long term. For exampe, instead of a chief executive chasing half-yearly profit targets as the market (investors and fund managers) currently demand, the DA should plan a wide-ranging tax reform that encourages those investors to stay invested.
Such a reform would tax short-term investing punitively and reward long-term shareholding. A profitable one-year investment could attract a heavy capital gains tax and, perhaps, a 10-year investment no tax at all.
The target is a stable jobs market populated by focused companies. The aim is to encourage the chief executive to prioritise running his or her company without having to look over a shoulder at what the markets are saying, cutting costs at every criticism. And to reward stable investors.
We need also to recognise that it takes an employer to create a job. That means we need to make it much easier for people to take the risk of starting a business. Currently, any business has to register for VAT if it turns over more than R1m a year. But R1m is not what it used to be and it is urgent that this threshold is raised.
We need to think about economic policy from inside the shoes of all the actors in our drama. A stakeholder economy represents an immense opportunity to rewrite the SA economic story.
It would strengthen and help build an inclusive democracy, eliminate inequality as a direct exponent of its intent and function and fight climate change while giving rise to new innovations and efficiencies, along with making the informal economy progressively more formal and integrated.
That is the power of approaching the economic problem with a value matrix which places profit at the service of people. In tandem with long-term financial policy certainty, a strong net of social security programmes, a robust education system, and a new commitment to protect public institutions which enable an efficient government bureaucracy, you have the makings of an economic dynamo.