Reminder+for+SA+business,+Friedman,+B+Day

Business Day, Johannesburg, 06 July 2005
=Reminder for SA business that people have to buy into change=


 * Steven Friedman**

DELEGATES at the African National Congress’ (ANC’s) national general council meeting may have been sending a message to their leaders. But business, too, needs to listen carefully.

There are two ways in which business might respond to the resistance that thwarted adoption of a discussion document urging a less regulated labour market.

One, which tends to reflect mainstream business thinking, is to lament the victory of politics over a sensible economic proposal that SA needs. In this view, support for regulated labour markets is unreasonable, and the path to growth lies in defeating or bypassing it. Those in the ANC who favour labour law reform need to push it through, despite the opposition.

If that means frustrating democracy within the ANC, so be it. Much of business and many commentators seem convinced there is a “right” economic recipe, and that ensuring we adopt it is far more important than allowing everyone a say.

This approach sees the economy much as we might a motor vehicle. If our car breaks down, we do not want service station employees to debate how to fix it and reach a compromise that enjoys broad support. We expect those who have been trained to repair it to do so. Similarly, if the economy is to be fixed, those who know how to fix it should be allowed to get on with it.

But there is another way of looking at this issue — one that the ANC meeting has brought into sharp focus.

This is to see economic success not as the product of the “right” recipes, but of the extent to which people “buy into” economic policy. Economies are not cars; they are run not by machinery but by people. And they grow when people are willing to forgo immediate reward for future gain — by investing and working rather than consuming and relaxing.

The recipes that instil the confidence which makes us do this can vary because what persuades people to invest and work in one place may not do the trick in another.

In our society, government cannot impose solutions on businesses, whose co-operation it needs. But neither can business impose solutions on government because, unless there is broad acceptance of economic policy, people will not co-operate with it and business-friendly recipes will be derailed. Nor can either simply impose on labour because the alternative to a trade union movement participating in policy is not the unlimited freedom of management but anarchy in the workplace as workers without a formal voice find ways to make themselves heard.

In this view, the ANC decision was a timely reminder that economic policy change cannot be imposed — it must be negotiated, and must win voter support. And that means not only that those who oppose it must be included in discussion, but that concessions must be made to their concerns if policy is to be workable.

Opponents of “more flexible labour markets” are not dinosaurs who have failed to read the latest economic theories. Their opposition is born of fears that change will erode important worker gains. It was not that long ago that most workers had to work for little pay and few, if any, benefits, and could be fired without reason. It is not odd that many fear concessions that may return us to that period.

Those who believe change can benefit workers cannot win the argument simply by asserting it — they need to win majority support for their view. And, since it is highly unlikely that the concerns about change are without any merit, they need to be accommodated so that any presumed economic gains are not wiped out by the costs of conflict.

The ANC decision is less a blow to reasonable economics than a demonstration that remedies need wide support if they are to produce the confidence that prompts growth, no matter how fashionable they may be.

Decades ago, a thinker called Karl Polanyi warned of what happened when economic prescriptions flew in the face of the interests and values of many. Where the market was in conflict with society, he wrote, society would fight back — to the cost not only of the market but much more besides.

The ANC’s national general council is not “society” — it is only a section of it. But it is an important section, without whose support effective economic policy is impossible. And, to a degree, what happened these past few days is that society fought back.

If we are to learn from the experience, business leadership and economic commentators need to reflect on how we can find ideas for growth that ensure that society comes along for the ride, not those that force it to wait patiently by the roadside to ambush policy.


 * Friedman is senior research fellow at the Centre for Policy Studies.


 * From: http://www.businessday.co.za/articles/opinion.aspx?ID=BD4A64845