What is this website?
As South Africa’s economic situation becomes more dire, the Free Market Foundation (FMF) has taken the initiative to prepare a book — Radical Economic Transformation: The Legal Route to Economic Freedom, comprised of various authors and edited by Martin van Staden.
The book is divided into three parts. The first part is the Promotion of Economic Activity Bill, the second is the Laws Affecting Small Business series of analyses on the laws that undermine small enterprises, and the third is research conducted by Dr Christoph Klein on the benefits of Decentralisation and Deregulation.
This book and its three parts have been digitised onto this website.
Together, these texts represent a comprehensive liberalisation agenda that will make Radical Economic Transformation a reality for all South Africans.
What is “Radical Economic Transformation”?
“Radical Economic Transformation,” or “RET,” has become a very well-known term in South African political discourse. It is, in fact, a term of abuse, understood to refer to a particularly corrupt and opportunistic faction of politicians. But what does Radical Economic Transformation actually mean, when we break it down into its component parts?
To authoritarian interventionists, it has a particular meaning. But when abstracted away from the errant thinking of its invokers, what can this term tell us?
“Economic transformation” means that the economic lot that most South Africans are burdened by, changes. This lot is one of destitution and unemployment. But this cannot simply be ordinary change, it must be “radical” change, a complete 180-degree turn away from where South Africa is presently going.
To understand change – radical change – we must first understand where South Africa currently finds itself.
South Africa had an interventionist government for most of the twentieth century. It was only in the late 1980s that the National Party realised that economic freedom was a necessary part of creating a prosperous society. The African National Congress, long under the sway of the Soviet Union and its communist satellite states, also came to realise in the early 1990s that it would need to become much more market friendly if it wanted South Africa to flourish.
With the transition out of Apartheid, South Africa underwent significant liberalisation, not unlike those seen in post-communist states after the Iron Curtain fell in 1989. The result was a significant turnaround in lacklustre economic growth and rising incomes across all population groups.
The seeds of Radical Economic Transformation were planted in the 1990s when this liberalisation was being taken seriously. But almost as soon as they were planted, some wanted to dig them back up again. In the late part of that decade, the government introduced a set of labour laws that plateaued the rising incomes of black South Africans, and, with time, created a situation where more than 12 million South Africans today find themselves unemployed. Labour was made painfully expensive – too expensive for small and medium enterprises to contribute meaningfully to the joblessness crisis.
But as the 2000s came and went, the South African government moved further and further away from any residual belief in the reality that markets, when free, create prosperity. It instead sought to rekindle the economic fallacies of the Soviet Union and pre-1980s South African state, and try to regulate South Africa into prosperity – an impossible feat. As the government did this, economic growth all but disappeared, and skilled and high-net-worth individuals have been leaving the country in droves ever since.
South Africa’s economic freedom apparently peaked in the year 2000, when the Canadian Fraser Institute’s Economic Freedom of the World (EFW) report pegged South Africa as the 54th most economically free state in the world. Today South Africa ranks 81st, and its trend is away from economic freedom.
The FMF has been committed to the cause of economic freedom in South Africa since being founded in 1975. Economic freedom – allowing free people to determine their economic affairs without the undue interference of indifferent politicians or officials – is shown, year on year, to be correlated with economic prosperity.
The poorest 10% of people in countries in the top quartile of economic freedom in the EFW, had incomes nearly eight times higher than their counterparts in the lowest quartile (those states with a more economically involved government) over the 2000-2018 period. Where people are free to pursue their own economic and commercial ends, they tend to be wealthier than those places where a State bureaucracy is constantly accosting, taxing, and regulating them.
Radical Economic Transformation, in other words, can in all honesty mean only one thing: South Africa’s present political-economic direction, that of more and more government involvement in economic affairs, must be abandoned, in favour of a radical new path. This radical new path is that of intensive market liberalisation.
Contact
Queries and comments can be directed to the Free Market Foundation: FMF@fmfsa.org