President Jacob Zuma is right! We do need radical economic transformation (RET) and the Free Market Foundation (FMF) has been advocating such policies for over 40 years. We thank the President for realising that RET is exactly what South Africa needs.
The FMF has supported a radical departure from the economic orthodoxy in South Africa since its foundation in 1975. Indeed, the FMF’s founding constitution includes four guiding principles with which no resolution or activity of the Foundation may be inconsistent. These principles are:
40 years ago, in 1977, an FMF Council meeting condemned Apartheid spatial planning laws for their lethal consequences on employment and the economy. At the time, this was a radical vision for change from the top-down authoritarian control economy of Apartheid to a bottom-up voluntary market economy.
- The right of all people to live their lives as they see fit.
- The right of all people to own and control property and its produce.
- The right of all people to be free from violence or the threat of it.
- The free market economy is the only economic system consistent with these principles.
Yet, despite undergoing significant economic infrastructure improvements since 1994, South Africa fundamentally remains a permission-based society.
Talk of ‘radical economic transformation’ dominates the national discourse yet as FMF executive director Leon Louw says, “Nobody really knows what radical economic transformation means except it is about race. Real transformation can only occur in one direction: power from government to the people – the free market. Otherwise, we’re just perpetrating old political habits.”
A free market economy is very simple. It means the recognition of and strong protection for property rights; agreement-based (as opposed to coercion-based) engagement between people; minimal government interference in private affairs and the rule of law (as opposed to wide discretionary powers). In a free market, the exchange of goods, services and labour is done voluntarily without state interference.
A market economy is a human economy. Human dignity of all people must be respected, without government dictating the lifestyle or business choices of those within its jurisdiction. Radical economic transformation means an economy in which:
- Goods and property cannot be confiscated for political purposes and citizens are secure in the knowledge that their property is safe.
- Taxes are low and are not used to fund massive bureaucracies. Citizens are allowed to keep the more of the money they earn.
- Buyers and sellers trading freely in an open market without Government interference determine the prices of goods and services. Arbitrarily high prices are avoided.
- Professional development is simple and reasonable without paternal government supervision. ‘Licenses’ and ‘clearance certificates’ would no longer be required for people to do something they are perfectly capable of doing without state interference.
- Purchasing smallholdings becomes the same as any other property transaction with no need to ask for ‘permission’ from government to subdivide agricultural land.
- Starting businesses is easy removing the need to submit complex forms and documents mandated by financial services regulations or have to adhere to arbitrary zoning bylaws.
- Corruption is substantially reduced. Less political involvement in the economy would reduce the possibility of cronyism and unethical ‘tenderpreneurship’.
Radical economic transformation explicitly means that the economy must change. And any substantive change in the South African economy must be towards a free market. Louw said, “More government control means more of the same. How is that radical?”