State intervention development: colonialism unnecessary

Recently Helen Zille caused a storm. This was because she tweeted that colonialism wasn’t all that bad. In doing this she implied that it brought development to the backward parts. For this the ANC attacked her. Also her party, the DA, is having a disciplinary hearing. As a result they might make her resign. But colonialism is unnecessary for state intervention development.

I hold no brief for Helen Zille. This is because her remarks are churlish and offensive. I have heard similar remarks around Stellenbosch dinner tables. There the dinner company is almost always all white. They don’t know me. They assume I will be party to their gossip. Zille’s comments reflect white consciousness. By this I mean Eurocentic racism. By contrast I want to talk about state intervention development.

Zille made these comments in Singapore. This is because she was impressed with its order and cleanliness. Unlike what she has to endure on the N2. There near the airport she sees endless squatter structures. But under colonalism Singapore had a housing shortage. This showed because squatter camps proliferated. The post-colonial government implemented public housing. Scholars linked this to a unique development process. The Singapore experience has lessons for us. But not the ones that Zille says. Instead, it’s about state intervention development.

White dissing of state intervention development

Zilles’s believes that people need to take responsibility. Accordingly, they can’t blame colonialism and capitalism. This means limiting the state and freeing up the markets. Accordingly you free markets by trimming back regulations. When markets work, she argues, you set free economic potential. Another motivation is that government intervention breeds corruption. Already the DA under Tony Leon projected a “squeaky clean” image. In reflecting this Zille has spoken out against ‘crony capitalism’. Consequently, DA policies intend to end this cronyism. Thus they intend to enable private enterprise. Rather than state intervention development.

Communication and social tropes

Zille shares her point of view with many. For example, you see support from interactive comments on her tweets. What she said was colonialism wasn’t that bad. She made the point it also had positive aspects without which we wouldn’t be benefitting. Therefore, her examples of colonialism-dependent benefits are an independent judiciary and infrastructure. She also mentions specialised health care and medications. For Zille Singapore’s success’ arises from the positive legacy of colonialism. In practice this meant that Singaporeans took responsibiity for their own development. They did this through hard work, thrift and taking responsibility for their children.

Zille uses texts that are ‘colonialism’s necessity’ tropes. It doesn’t matter that she wasn’t defending colonialism. Because interactive comments show the social meaning of her words. Namely, that the technology and infrastucture of modern life necessitated colonialism. Should Zille have been aware of this? She communicates a message to constituencies. Each has concepts that give meaning to her words. It is clear what the trope of the majority of responders was. Their names indicate that most were white people.

She said development results from hard working, saving and looking after your children. Based on this she bemoaned the state of South Africa. Thus this implies that South Africans are lazy, spendthrifts and lack strong morals. It also implies that South Africans blame colonialism for their plight. Consequently, they hide their own inadequacies. These are the true cause of their poverty and marginalisation. This is why, according to Helen Zille, we are so far behind the Singaporeans.

Colonialism, Singapore and development

This viewpoint has conceptual and empirical problems.

Zille bases her views on methodological individualism. This assumes that each of us exists in a bubble. The bubble insulates us from social influences. It is then up to each of us to position ourselves for success. Government should enable this process. So removal of apartheid was positive. Because apartheid had interfered with individual aggrandisement. But, now we are free. According to free-market thinking we must not crowd out private initiative. I acknowledge there is some merit to this argument. But we need to conceptualise state intervention development. Because most advanced societies have benefitted from it.

This anti-state approach is free market dogma. It explains nothing about the conditions of life. By contrast Arumugam Pillay and I show how historical context influences social development. Consequently, we developed an alternative analytical framework. In so doing we represent this as triangulated interaction of Capital, the State and Social Struggle.

We argue that these structured processes drive development. Social struggle can drive progressive change. To do this progressive forces must organise for equality and economic development. But change isn’t an automatic outcome of capitalism and colonialism systems. Zille and her apologists keep bleating about unfettering the market and private initiative. However, we demonstrated our approach by referring to historical events.

What are the facts?

Besides, the facts do not bear Zille out. Urban scholar Manuel Castells and colleagues demonstrated two important points in the “Shek Kip Mei Syndrome” . First, under colonialism Singapore suffered a severe housing shortage. Second, generous public housing welfare was a key factor in Singapore’s state intervention development.

During the colonial ‘free market’ there were severe housing crises in Singapore. By 1947 two fifths of the population lived in units accommodating 21 persons or more (page 223). 50% of the population lived in units accommodating 17 people or more (page 233). Squatter colonies mushroomed everywhere in the city (page 233). These housing conditions gave rise to social problems. This situation was the outcome of a non-interventionist colonial government (page 327). So Singapore’s development took off in spite of its colonial past. This contradicts Zille’s claim. Which is that that colonial Singapore was a precondition for contemporary Singapore.

Between 1965 and 1986 Singapore’s annual GDP grew by between 8% and 10%. At the time this was the highest in the world. At the same time there was low inflation and foreign borrowing. Unemployment declined to the 3% to 4% range. And standards of living for the population improved dramatically (page 155). Castells et al do not mention morality, hard work and thrift as reasons.

Singaporean government intervention

But they attribute the economic achievements to seven modes of government intervention.

1. Providing industrial and business infrastructure.

2. Providing fiscal and financial support to foreign investors.

3. Balancing fiscal policy.

4. Public investment in industrial ventures and financial markets.

5. Stimulating technological development, industrial productivity and manpower training.

6. Implementing a specific ‘Singaporean” form of welfare state.

7. Setting and pursuing developmental goals through appropriate implementation plans.

Singapore’s policies subsidised multinational businesses. But Castells et al considered welfarism a critical factor. They devoted three out of five chapters to welfarism. The main plank of Singapore’s welfare system was public housing. The state funded and built new housing estates. They let and sold housing to citizens. They also integrated living and workplaces. (Neither ANC nor DA governments achieved this). In addition, the state subsidised the cost of this housing (social wage). By acquiring land at low cost it limited speculation. Low land prices and the social wage enabled cheap labour and overheads without sacrificing quality of the labour. This meshed with other strategies for attracting foreign capital.

This shows up Zille’s exclusive focus on individual character and family morality. She omits state intervention as a necessary function of Singapore’s development. She says nothing about the impact of Singaporean state welfare strategies.

Democracy, development and corruption

The Singaporean state was authoritarian. The Peoples Action Party (PAP) led the anti-colonial struggle. It had strong left-wing leanings. But, after independence it separated from its socialist approach. It also introduced controls over labour organisation. It repressed union power. This was necessary to control wage inflation. It fitted in with the state plans for social and economic development. PAP justified this through an ideology of ‘national survival’. Then the Federation of Malaysia had expelled Singapore. The city-state also faced serious internal ethnic conflict. In spite of authoritarianism PAP won all elections between 1959 and 1990.

Democracy and economic development

There is no direct relationship between economic growth and degrees of authoritarianism. This means there’s no formula for the mix of democracy and development. Under certain conditions you have high growth and entrenched democratic freedoms. Sweden and Norway are examples. Thus, Zille’s reflection about too much democracy is besides the point. Also irrelevant is an ANC assertion that ‘the time for debate is over, now we must deliver’. Freedom to debate and democracy are handmaidens. Without public debate democratic processes are hollowed out. Then the powerful elites get to make the decisions. Citizens’ active participation is central to our constitution. We must guard against a small minority deciding on development. Mandela’s and Mbeki’s manipulation of the ANC to make the GEAR policy is an example of this. And look where it has got us.

Corruption

Castells et al emphasize effective bureaucracy as necessary for Singapore’s development. But, they do not mention corruption. Thus I assume that this was absent during the first few decades. But there are current reports about widescale corruption.

Since the 1990s some economists described Singapore as ‘crony capitalism’. Crony capitalism is where a group of insiders use the state to accumulate capital. Zille has described looting by Zuma and supporters as crony capitalism. But she omits current indications of a crony capitalist Singaporean state. This is a serious gap in her view of contemporary Singapore. We must be vigilant against corruption and kleptocracy. Zimbabwe is a telling example of where this leads to. The Zuma administration manifests toxic corruption at all levels of the state currently. And now it appears that Singapore might also have reached this point.

Lessons learnt from Singaporean experience

I would like to conclude by identifying four lessons from the Singaporean experience, according to Castells et al.

1. A land policy to keep costs affordable and prevent excessive speculation (page 326).

2. A sound housing financing system with affordable rents and mortgage payments (page 327).

3. Effective and efficient management of housing projects (page 327).

4. Housing connected to economic development, jobs and social services programmes. (page 327)

How we ‘see’ economic and social development is critical. In my experience our municipalities function to support private profiteering. But Singapore teaches us that a state can ensure items 1 and 3 better than the private sector. And only a powerful state can achieve item 4 (page 327).

Castells et al also emphasise that economic development requires state welfare. In the quote below they mention “collective consumption”. This refers to a state-provided good or service (like housing). This points to the problem of seeing development as mainly supply-side driven. Whereas the state needs to make equally, or even more, investment into welfare.

“What our study points towards is the need for recognising the articulation between collective consumption and economic development through the deliberate action of the state, something that is generally absent in the policy formulations of most international institutions for developing countries”.

What does INSITE propose for state intervention development?

We address the question of the agency of the changes required. This agency is the extra-parliamentary social forces. We conclude this from the fact that these forces were strongest between 1979 and 1994. They achieved a political revolution as a result. We need widespread grassroots collective power to put in place appropriate policies. This requires on-the-ground-organising for communities. In this way they can assert their power over legislatures and executive branches.

Compendium of interventions

This also requires developing alternative strategies and instruments. We have to assume we will be in power tomorrow. Then, how would we do things differently? The answer is that we need a compendium of policies and interventions. Because this will give us a comprehensive, integrated approach. Yesterday, COSATU’s Strategies Coordinator expressed useful thoughts on a framework for development strategies. This covers eight areas of intervention

1.Regional Industrial Policy.

2. Assistance to Save Jobs and Productive Capacity.

3. Channeling and Regulating Private Sector Investment.

4. State Investment.

5. Development Infrastructure.

6. Combatting Corruption.

7. Developmental Macro-economic Policies.

8. Addressing Income Inequality.

Specific economic and housing instruments

The above framework provides a context for proposals in Arumugam’s and my paper. Our proposals were specific to urban economic development and housing. Thus we focused on how we could create more employment. And at the same time develop inclusive and integrated cities and towns. Like the COSATU Coordinator, we are critical of the National Treasury’s neo-liberal tinkering. For example, with spatial frameworks, development corridors and densification. Yes, these are important for efficiency gains. But they are the wrong instruments. Because they will not shape investment into productive assets that create jobs. Accordingly, we propose instruments to directly shape capital accumulation patterns in green manufacturing.

Public Banks, Public Developers and Fiscal Reform

In the paper we proposed three instruments. Debate about these could move us forward. Thus the first instrument is Public Banks. Linked to this is the second instrument, municipalities as Public Developers. And the third is Fiscal Reform.

Public Banks address challenges of affordable finance. This finance is targeted at SMMEs and government infrastructure. An international example of this is a proposal by Ellen Brown. Unsurprisingly, she is President of the Public Banking Institute in the US. The point is that she has explored interesting scenarios. In this proposal a state bank funds California’s rapid transport system. In conclusion she shows how this achieves significant savings.

Public developers means pro-poor municipal developers. If they are truly pro-poor they will advantage the urban poor. Therefore they will develop well-located land for integrated affordable housing. Also, they will develop industrial parks. This should include through expropriation where necessary. The Spatial Planning and Land Use Management Act (SPLUMA) already exists as the legislative frame work for such policies.

Fiscal reform refers to adjusting taxation. Because appropriate taxation can incentivise productive economic enterprises. Furthermore taxation is raised to penalise the speculative finance, insurance and real estate (FIRE) sectors. Political economist Michael Hudson has written about this extensively. In accordance with his approach he advised the Latvian government. He promoted fiscal reform there. At this time Western banks were meting out ‘shock treatment’ to the Russian Federation. This followed the demise of the Soviet Union in the 1990s.

We must educate ourselves about the detail of what we propose. In other words it’s not good enough to say WHAT we demand. We also have to clarify HOW we will tool our strategies. It is in the hope of stimulating such a debate that I have made this contribution.

Paul Hendler
Stellenbosch
27 April 2017