If this country can create a “high-trust” economy, it will go a long way towards the acceptance and entrenchment of capitalism in South Africa.
This was the view of Peter Bruce, editor of Business Day, during a recent Business Forum presented by the Rhodes University Investec Business School in Grahamstown.
Warming to his topic of “Saving Capitalism”, Bruce suggested that there exists a high level of middle class anxiety which dictates against trust of capitalism. But the single most important mitigating factor, he believes, is that the brand of capitalism needs adapting to our circumstances – and this has not occurred in our new democracy.
“We had English capitalism and Afrikaans capitalism”, he recalled, “both of which were ‘top-down’. When the ANC came into power, it effectively retained status quo, converting very quickly from its stated policy of nationalisation to the adoption of the previous economy based on stocks and shares. This is not a job-creating brand of capitalism; it does not popularise profit”, he believes.
“What we need is stakeholder capitalism”, Bruce proposes. “We must popularise profit. Imagine if everyone in this country accepted that profit is a good thing”. But in order to achieve this we must address and remove entry barriers so that the poorer people with neither stake nor interest in business see some attraction in participation”.
“Give them money”, he proposes, and then lists eight steps though which it can be done.
He advocates the establishment of well funded and democratically elected trusts where poor people live. And he’s talking of billions! This is wealth creation like it hasn’t been previously imagined and it will eradicate the mistrust between socialism and capitalism which currently stifles wealth creation. “Here’s how to fund them”, he continues.
1) The state makes over all its property assets to the trusts but continues to utilize them in perpetuity, while paying rental or lease costs. It could thus transpire, as examples, that the Khayelitsha community becomes owner of the Simonstown naval base, Union Buildings; the San the Union Buildings, the Winterveld Community the reserve ban headquarters and so on. Should the state have no use for properties, the community trusts which own them will be allowed to exploit or dispose of them as is seen fit.
2) The three main union federations are invited to take (according to their membership prior to the event) ownership of all abandoned or illegally maintained properties in the inner cities. They must repair and improve these and may then sell them or list them.
3) The state undertakes to finance the primary school education at any state school of any member of a registered and audited community trust.
4) Non-executive company directors will sit in a supervisory board to which executive directors will report. Half of the non-executives will be nominated by the work force of the company concerned.
5) Companies will enjoy tax incentives in respect of the provision of a minimum of 10 percent of their shares to an employee share option scheme and this will be further encouraged by the lifting of the companies’ next secondary tax bill by the fiscus.
6) Shareholders will be encouraged to retain their shares by a pro-rata reduction in capital gains tax. This will also reduce short-term pressures on managers.
7) The supervisory boards of companies, not the executives, will decide by whom their companies’ pension funds are to managed.
8) All JSE-listed companies donate one percent of their market capitalisation to a pool thus creating an immense charitable trust worth a staggering R44-billion at inception. This fund, share sales by which would be free of taxation, will support projects and people put forward by the community trusts.
“One percent is nothing; the JSE moves up or down by more than that on a daily basis and nobody cares”, Bruce observes. “The big auditing and legal firms, by way of contributing to this new economy, should donate their services. In similar vein the trustees – the Chairman will be the president of the stock exchange – will not be paid”.
All this is, of course, just a start, says Bruce. “But if government and business begin to make money for the poor the siren calls of old socialism will fall away”.
“We don’t like change”, he concedes. “For the left, these ideas are a ploy to co-opt it and rob it of its soul. For business, the thought of making decisions along with workers is appalling. But if we are brave we can have an economy that produces more profit for more people and which goes out of its way to include the very poor. We can have a more democratic market and a more social capitalism. We lose nothing and stand to gain everything. We just have to decide it’s worth the effort to try”.
- Saving Capitalism -