Ismail Lagardien: Only the colours change

Ismail LagardienThe state has historically played a vital role in innovation, and in research and development. There is an abundance of evidence to support this idea of an “entrepreneurial state”.

Why, then, are there such low levels of support or enthusiasm for anything the government tells us?

Well, there are at least two main answers to this.

The first has to do with trust and the second with ideology.

Of course race, notions of exceptionalism and an almost sacerdotal righteousness run through all of these.

Evidence shows that very many of the innovative technologies that have become so vital to our daily lives originated directly or indirectly from state creations or interventions.

For instance, state investment in innovation, and research and development has played a significant and often a founding role in cellphone technology, air travel, satellite navigation systems, railroads, and much of the technology that goes into medical technology and pharmaceuticals, electricity generation and even water purification, among very many others.

The best, probably the most complete example of the entrepreneurial state is the iPhone.

When the company was first established, Apple received large sums of money from the US government.

Evidence shows that the state, especially in the US, initiated and bankrolled the internet and many of the algorithms, including the one that drives Google, the world’s favourite search engine.

One research project found that almost 90% of the most important innovations between 1971 and 2006 depended heavily on state funding.

This role of the entrepreneurial state is replicated around the world.

It has been shaped by what John Maynard Keynes explained as follows: “The important thing for government is not to do things which individuals are doing already, and to do them a little better or a little worse, but to do those things which at present are not done at all”.

There is a role, then, for an entrepreneurial state.

Why, then, do so very few people not take President Jacob Zuma seriously when he speaks of structural change, or of progressive state-led economic transformation?

Well, it has to do mainly with trust. Consider the following.

The state has a direct controlling hand in the postal service, South African Airways, the SABC, electricity generation and supply, the education and health systems and, of course, it is generally responsible for community safety.

There is no great genius and very little to gain from repeating the evidence.

Let us just say that there is very little to suggest that the state can be trusted to do better than it has over the past decade or so.

Whether we like it or not, evidence can help us make informed decisions.

Ideology is, however, what often makes us differ on the significance of evidence.

Things do not look good when we consider the clash of ideologies that marks the din of our times.

This clash has hardened into two bookmark positions: one is shaped by market fundamentalism and the other by African nationalism, where “African” is a malleable identity infused with de rigueur flourishes of race.

The market fundamentalism one is shaped by the belief that the state should simply get out of the way and that private companies should lead.

While there is a solid body of scholarship that supports this, many of its current proponents tend to forget that after 1948 the state was, in fact, deeply involved in innovation and research and development – for the benefit of a select racial group.

Today, racial distrust (I will avoid calling it racism) is now couched in the language of market orthodoxy.

Put bluntly, it was okay for the white minority government to do it for whites, but the black government should rely on “the market”.

At the other end is the belief that all the county’s problems can be blamed on “white monopoly capitalism” and on the belief that whites “own” the economy.

This may well be true, as a statement of fact, in that 400 years of privilege and opportunity has segmented (vertically) fairly tidily. However, if we take Zuma and the tolkachi (the old system of cronyism the ANC copied from the former Soviet Union) seriously, we will believe that the solution to all South Africa’s ills is not to create an expansive, inclusive political economy and invest in education, innovation, research and development, create jobs, expand welfare and create buffers to protect the poor from shocks.

The solution to all South Africa’s problems is to approach the matter the way you do a colouring book. You take a political economy that is diabolically unjust, that suffers from a dearth of fresh thinking, and that reproduces historical iniquities, and you simply change the colours.

The story line remains the same, only the colours change.

 Dr Ismail Lagardien is executive dean of business and economics at NMMU.

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