The Activist Developmental State is an idea I feel deeply ambivalent about.
The picture below of Shanghai in the 1990s and then again last year is from a blog by Roger Pielke, Jr, professor of environment studies at the Center for Science and Technology Policy Research at the University of Colorado. (Thanks to Anthony for the link and please click on the pic to go to Pielke’s website.)
This stark, and wonderful, portrayal of astonishingly rapid social, environmental and economic change rather raises the question of how it was achieved.
And, more importantly for our provincial purposes here: can we do something similar?
The New Growth Path is a plan to achieve job rich, environmentally friendly, economic growth while narrowing the Apartheid wage gap.
Saying it is a plan with those intentions says nothing about whether it has any realistic potential of achieving any of its objectives – or of perhaps leading to some unforeseen outcome.
So what did Chinese politicians actually do to “cause” these changes to happen?
Wikepedia says rapid growth came about as a result of the economic reform programme (I have left Wikepedia’s links and notes in there):
Economic reforms began in 1978 and occurred in two stages. The first stage, in the late 1970s and early 1980s, involved the decollectivization of agriculture, the opening up of the country to foreign investment, and permission for entrepreneurs to start up businesses. However, most industry remained state-owned, inefficient and acted as a drag on economic growth. The second stage of reform, in the late 1980s and 1990s, involved the privatization and contracting out of much state-owned industry and the lifting of price controls, protectionist policies, and regulations, although state monopolies in sectors such as banking and petroleum remained. The private sector grew remarkably, accounting for as much as 70 percent of China’s GDP by 2005,[4] a figure larger in comparison to many Western nations. From 1978 to 2010, unprecedented growth occurred, with the economy increasing by 9.5% a year. China’s economy became the second largest after the United States.
Leaving aside the obviously important question of whether these changes have led to greater human good, the New Growth Path very clearly and explicitly is going in the opposite direction on some of these issues (privatisation, contracting out, shrinking public sector) but flirts with weakening the rand to stimulate manufacturing and the traded goods sector (a central plank of Chinese growth).
Now I have no idea whether the New Growth Path will cause anything to change.
But my instinct says that the most important thing the state can do is step out of the way and allow damned dammed (damn! – ed) up human potential to find its way to the sea – like is revealed in the pictures of this great city at the mouth of the Yangtze river.
I definitely don’t hold some extreme libertarian view that wants to shrink the state to nothing and leave everything to the magical markets. “The State” is the mechanism by which we achieve all the myriad things we would not be able to achieve individually.
But there is a fundamental choice in approach to the state’s role. Should the state do “the thing” we require to be done or should the state regulate how “the thing” is done by the markets? Many “things” are not immediately profitably so enterprising private individuals do not do them. These things must obviously be done by the state if our democratic processes determine that they are desirable or necessary things do be done. And certain undertakings are too big and complex for one private enterprise. Those things are best done by the state or forms of state that arise through international co-operations.
The New Growth Path, it seems to me, bends the stick the way of the state being required to do more as well as more regulation of the enterprise of private individuals.
I strongly suspect that this is a step in the wrong directions but I am uncertain enough to be open to persuasion.
Nic Borain 
Great debating points, Nick. The difficulty in talking about ‘capital’ in South Africa is who exactly you are referring to. Anglo and De Beers? Or Imperial Crown Trading? The examples show that it’s not that easy to rely on the ‘private’ sector to stimulate development. Investors are there to make a profit, not extend their munificence to the ‘public good’. And the monopoly companies are so huge, you might as well be talking about a state within a state – but without the overarching imperative to create jobs.
Rob Davies’ industrial policy action plan (http://www.dti.gov.za/ipap/ipap.htm) points out that SA’s cost of capital is relatively high and is highly concentrated in consumption-driven services, and to a lesser extent in capital- and energy-intensive industries. “Therefore, the private financial sector in South Africa is not adequately aggregating savings and distributing them towards productive investment.”
The DTI and DET have been studying Brazilian, Korean and other models of public financing so that the IDC and DBSA can provide the kind of funding needed for macro-economic expansion. I think we should give them a chance.
Good article Nic – except I can’t understand your uncertainty. The SA state so obviously has a capacity problem – manifested eg in poor educational outcomes from the public schooling system, poor health outcomes, poor outcomes from the criminal justice system, under-performance of a lot of SOEs. Now we want state-led economic development? Come on.
As for China, this picture of an omnipotent state wisely directing the process of economic development is just rubbish. Read any serious book about it. Its been absolutely chaotic and accompanied by large scale corruption and extortion with Beijings writ at provincial & local levels largely ignored. The decisive factor has been the mobilisation of a huge army of cheap labour unlocked through the process of urbanization. Its much like the industrialization processes in Europe and America before – akin to what Marx described as primitive accumulation. And it is not terribly efficient or environmentally friendly if you look at resource usage – to quote a former Chinese minister “To produce goods worth $10 000, we (China) need 7 times more resources than Japan, nearly 6 times more than the US and, perhaps most embarrassing, nearly 3 times more than India. Not that I want to complain about China’s profligate resource usage – its great for SA and for Africa.
Thanks Jannie and Talk Africa – A couple of people joined this discussion on facebook – but unfortunately I have not yet got their permission to put their comments here (Harald W, John M and Chippy). However, I did make a contorted reply … I can follow it, but that is only because I know what I mean …. here it is:
“Firstly, I don’t know what the etiquette is, but do you all mind posting those comments on my blog as well? For some reason I get a healthy number of readers, but very few comments.
Secondly, I have to agree with all of you (and at least Chippy, John and Harald have worked fairly extensively in and around “the state” so you should know of which you speak) when you dismiss the idea of the South African state becoming, in the terms described in the NGP and implied by IPAP2, an Activist Developmental State. In the old days, following that old wife strangler Louis Althusser and suicide Nicos Poulantzas, we used to attempt to understand the state as a coalescence of the contending classes – both the structure that maintained capitalism, but also a structure that reflected the strength of the classes that opposed capital.
Our monomania aside, I think it is correct to understand the state as both an instrument of the powerful groups and a gauge of those group’s relationship to each other. Thus, this state facilitates a powerful rent seeking elite (what some of us would have called a comprador bourgeoisie in the bad old days) and it is the main employer of a significant fraction of the emergent petit bourgeoisie. Niether of those groups have any real interest in the efficiency of the state (except its efficiency in collecting taxes) – they are essentially parasitic classes that feed off or loot the state. Both the industrial working class (represented by Cosatu) and global capital (from big mining to PnPay) have a huge interest in the maintenance of infrastructure (Eskom etc) and the systems and laws that keep the economy functioning – i.e. the whole state. Both these classes are vigorously complaining about corruption and inefficiency. The poorest and unemployed are the groups that most need the state to be efficiently deployed in redress and service delivery, but their political weakness means their voice falls on stony ears.
BUT STILL I have a little uncertainty about dismissing the NGP and the Activist Developmental State. I think the state that could implement EPatel’s New Growth Path is pie in the sky (it would be nice but unfortunately it’s not there – not anywhere). BUT, this IS Cosatu trying to force the state in the direction of serving its interests – which are narrow, but wider than the interests of the looters. If the Activist Developmental State means someone is going to concentrate on public servant’s training, incentive schemes, performance management etc etc that’s obviously a good thing.Currently much (or many) of the resources are being stolen or pissed against the wall. So does it matter if they are diverted from that end and expended on chasing the pie in the sky?
This is a bit like the reason why I still feel okay about the World Cup … at least we saved something from being stolen by the gangsters … even if we spent what we saved on these white elephant stadiums … they are there with good surrounding roads as is the happy memory … those resources could have ended up like all those others did: in Swiss bank accounts, in the bricks and mortar of disgusting houses in Dainfern and in Restaurant bills, hookers and hotel rooms in Moulipoint, shopping in New York and Shanghai etc. etc.”
27 January at 22:46
Like the article, Nic. One can ask the deeper questions of agency, and whether it is dispersed or concentrated. Notions of a single state ignore internal differences.
But I think the problem in some of our government departments is more m…undane and direct. Can they do anything? Looking at some of our govt departments, e.g. Energy, not only can they not regulate the sector effectively (admittedly they are dealing with large vested interests); they cannot even procure services properly in many instances, or fail to do so. Which poses the question whether “the state” has the capacity to do anything ?