South African Communist Party

SACP rejects compradorial policymaking and its neo-liberal paradigm

Sunday 12 October 2025: Except for references by some to a leaked document, we have not seen the government strategy called Growth and Inclusion (GAIN), nor have we been consulted at any stage in its formulation. We will therefore produce a critique of GAIN once it has been made publicly available. However, given emerging references to GAIN, including by the ANC President Cyril Ramaphosa during his remarks on 6 October 2025 when he closed its National Executive Committee meeting, it is crucial to highlight our observations at this stage.

In outlining the key economic policy decisions of the meeting, Ramaphosa said, “These interventions are intended to support government’s proposed implementation plan on growth and inclusion [GAIN], and which informs the Annual Performance Plans of various government departments”. Save for stating outright that there was also no Alliance consultation, we will address those interventions separately in due course, except for those that are either similar or the same as the approaches or the measures we shall critique in this statement.

“Growth through inclusion”?

Since we do not have a copy of GAIN, we shall base our critique in advance on the working paper titled “Growth Through Inclusion in South Africa”. The paper was produced and first published by the Growth Lab associated with the Centre for International Development at Harvard University in the United States in November 2023.

The Growth Lab, especially its leading figure, has exerted disproportionate influence on the South African government’s economic policy choices since the 2000s, including through concepts such as “binding constraints”. It is in this context that neo-liberal macro-economic conservatism took hold once neo-liberalism was embedded in our policy space through the imposition of the Growth, Employment and Redistribution (GEAR) strategy in 1996. After GEAR’s underpinning assumptions were entrenched, under the notion “fundamentals are in place”, supply-side or sectoral factors identified as “binding constraints”, but never the neo-liberal macro-economic policy path, have solely been blamed for South Africa’s economic failures. This distortion and subordination of economic policy must end.

If it is the commissioned source or the founding template of what the government now refers to as the GAIN strategy, the paper produced following a visit to South Africa by members of the foreign-based group, perhaps with an evergreen contract designed in ways that give it legitimacy, represents the privatisation of policymaking itself. The paper is drafted in a way that seeks to dictate the direction of South Africa’s economy and development path. It could as well form the latest iteration of the base template on which the policymaking compradors, those who act as transmission belts for foreign-determined policy directions, anchor their stifling of what should be democratic policymaking. This undermines the legislated principle of consensus-seeking consultation that underpins institutions such as the National Economic Development and Labour Council (NEDLAC). Particularly, it is labour and community constituencies who are more undermined by both the approach followed and the class content it produces.  

Rather than promoting inclusion, the compradorial policymaking approach excludes and undermines homegrown research and institutional capability, especially progressive South African researchers, academics and institutions such as public universities, research bodies and their research programmes, to name but a few. This trend seems to be a new practice in academic neo-colonialism dressed as technical expertise. The working class needs to build maximum unity to oppose all forms of the surrender of national sovereignty, including the handing over of public policymaking to foreign actors under the false guise of expertise and inclusion.

In substantive terms, beneath the paper’s polished economics language lies the reproduction of a familiar neo-liberal script. Its core arguments of “growth through inclusion”, “growth and inclusion”, “binding constraints” and “comparative advantage” may appear attractive at first sight, but upon closer scrutiny they emerge as recycled or co-opted notions designed in pursuit of neo-liberal paradigm maintenance.

Meanwhile, under GEAR, and other neo-liberal policies that followed, South Africa suffered a crisis of mass unemployment, to which we shall return, together with widening inequality and persistent high rates of poverty. The promise of shared prosperity through both distribution and redistribution was betrayed by the very logic of the market-driven model the paper seeks to further entrench.

The evidence is undeniable. Workers’ share of income from production and trade, including services, has fallen steadily or at least stagnated while corporate income, including profits, rents and dividends for capitalist bosses, has soared. The pay of their chief executives is obscenely high as well, a stark contrast to the misery endured by the working class under the exploitative wages system.

The workers’ share of GDP, once above 55 per cent, has dropped below 45 per cent, signalling a decisive shift in favour of the capitalist bosses, followed by their executives. More than half the population lives in poverty. These are not the results of individual mismanagement or wrongdoing in governance only, but the predictable outcomes of a system built on racialised, gendered and spatialised economic exploitation, private profit-driven accumulation and dispossession. It is capitalism at work!

The paper misidentifies the cause of South Africa’s stagnation by placing sole blame on “collapsing state capacity” and “spatial exclusion”. These are effects, not the principal causes. Beyond the long history of colonial and apartheid dispossession and oppression, the underlying cause is in the class inequality-based capitalist system itself and its neo-liberal policy regime. This has, of course, been compounded by state capture and other forms of corruption, including those driven by foreign-determined policy directions. Decades of commitment to privatisation agendas, including outsourcing, deregulation and fiscal austerity have deliberately weakened the state and empowered private capital.

The erosion of state capacity was by no means an accident. It was designed through neo-liberal policy choices that subordinated the state to dominant capitalist market forces. The paper seeks to deepen the subordination by promoting micro-economic liberalisation and profit-driven “private participation” and competition in sectors such as electricity, ports, rail, water and telecommunications, in the ultimate analysis, systematically eroding state participation in the economy instead of driving its inclusion, strengthening, expansion and diversification for the benefit of the people as a whole. The paper seeks to hand over these public assets to exploitation by private profiteers under the false banner of efficiency and inclusion.

As the SACP has long warned, privatisation today extends far beyond the sale of state assets or state-owned enterprises. It includes outsourcing, deregulation and micro-economic liberalisation as its strategies in favour of profit-driven private competition and exploitation within network sectors such as electricity generation, rail, ports, water and the high radio-frequency spectrum – which has been auctioned off to the highest bidders. In the end, this systematically drives affected state-owned enterprises into a path of a further decline, having historically deprived them of adequate recapitalisation through austerity in macro-fiscal policy. The paper frames the recapitalisation of state-owned enterprises as “bailouts” and “counterproductive”, portraying necessary investment or capital expansion under state ownership as a problem rather than a solution.

Its ideological posture seeks to entrench the domination of profit-driven interests over essential network infrastructure that should serve the people through thriving public utilities and state-owned enterprises, as opposed to governance decay, mismanagement, state capture, and other forms of corruption and destruction by the neo-liberal policy paradigm. The paper’s vision of “inclusion” is essentially the inclusion of private capital into spaces once reserved for, and according to the Freedom Charter which must be under public ownership and democratic control as part of monopoly industries. It is the inclusion of the few at the expense of the many.

If the South African government were to adopt the paper or integrate its neo-liberal ideas into the founding template of what it calls the GAIN strategy, it would mark a new low in the surrender of national sovereignty. It would be a disgrace and a betrayal of South African researchers, academics, workers and the principle of democratic, consensus-seeking consultation in policymaking, among others at NEDLAC. It would signify the deliberate submission of our sovereign policy space to foreign-determined directions or individuals who have no accountability to the South African people. This would amount to endorsing dependency and further dismantling the opportunity to build the state’s own research and planning capacity.

One of the paper’s most glaring weaknesses is its blind faith in the failed neo-liberal macro-economic framework that has governed South Africa for nearly three decades. It sees nothing wrong with the macro-fiscal and monetary policies that have strangled growth, starved the public sector of investment, entrenched unemployment and sustained high levels of poverty. The paper celebrates “fiscal discipline” when South Africa requires fiscal transformation. It defends austerity, implemented under fiscal consolidation, by framing the necessity for state-owned enterprises recapitalisation as “bailouts”, even as public infrastructure, as we have seen in electricity and rail networks, crumbled and essential services, in sectors such as healthcare, nearly collapsed, further eroding state capacity.

The paper does not challenge private ownership of the means of production. It does not call for democratic control of the economy. It offers no path to equitable distribution and to redistribute wealth or power. Instead, it proposes to “fix” inequality by expanding markets, to “empower” society, with the capitalist class framed as if it is society, by privatising the state or converting it into a field of profit making by competing sections of capital. This is a promise to achieve “growth” by capitalist market-led “inclusion”, including by inviting more profit-seeking and commodification into public life. It is the same ideology that has, in no small measure, contributed to deindustrialisation in South Africa’s manufacturing base, weakened labour and left millions unemployed.

True development will not come from foreign-determined policy directions and associated compradorial policymaking. It will come from deepening our national democratic policy sovereignty and a radical structural transformation of South Africa’s political economy to achieve the Freedom Charter’s economic goals. This will require a decisive break with neo-liberal orthodoxy.

The state must lead in rebuilding the productive economy, reviving manufacturing and expanding public works to serve as the skills development training space and absorb the unemployed on a decent work basis.

Fiscal policy must direct resources towards infrastructure, skills development and strategic industries, especially domestic manufacturing and related value chains development, diversification and expansion, as well as agrarian transformation, including agro-processing, and the rising digital economy, to mention but a few.

Neo-liberal macro-economic paradigm maintenance

The macro-economic section of the paper is about a rigid adherence to the neo-liberal paradigm that has dominated South Africa’s policy landscape since GEAR in 1996. Ironically, evidence shows that it is under no other but this policy regime that South Africa has seen the rise of and dismally failed to overcome macro-economic problems such as the unemployment crisis.

The central claim that South Africa’s economic slowdown is “not due to macro-economic problems or external shocks” but rather to “persistent and worsening domestic supply-side constraints” only is deeply flawed and ideologically loaded. This argument is designed to absolve and maintain the neo-liberal macro-economic policy paradigm under which South Africa has also seen continued deindustrialisation, widening inequality, persistent high levels of poverty and a social reproduction crisis, most of all affecting the working class.

For example, the lowest unemployment rate in South Africa, measured by the narrow definition that excludes discouraged work seekers, was 16.5 per cent in 1995. After the adoption of the neo-liberal GEAR strategy in 1996, the official unemployment rate climbed above 20 per cent and entered a structural crisis that has since deepened.

Today unemployment by the narrow definition is 33.2 per cent, affecting 8.4 million active work seekers. By the expanded definition, which includes discouraged work seekers, unemployment is far higher, at approximately 43 per cent, affecting 12.6 million active and discouraged work seekers combined.

In terms of national groups, unemployment is the worst for black African men and women. By the expanded definition, it is 43 per cent for black African men and 51.4 per cent for black African women, the most affected by both race and gender. Highlighting the structural character of the crisis, the proportion of workers affected by long-term unemployment is 76.6 per cent.

It is inconceivable that a crisis of this magnitude could be resolved through supply-side measures alone. Even more unacceptable are measures that undermine or seek to roll back state participation in the economy under the guise of inclusion while promoting competition between profit-driven interests in sectors where state participation should, in line with the Freedom Charter, serve as the mainstay.

The capitalist class, the social group often referred to in terms of economic ownership and control whenever the term private sector or private sector competition is used, is always a tiny minority. Any talk of inclusion framed from the perspective of competition among the members of this class will always target the economic exploitation of the masses of workers and serve as their active exclusion from economic ownership and control.

The paper’s treatment of the macro-economic policy space is narrow and devoid of a critique of the problematic capitalist system and its social relations of production. This flawed approach presents macro-fiscal and monetary policy as neutral instruments of “stability”. In reality, we have seen how these are used to serve class interests by curtailing public spending through austerity under fiscal consolidation and the guise of “fiscal discipline”, suppressing wages and prioritising the returns of finance capital over the needs of the working class, the majority of the people, and productive sectors.

The paper’s attack on wages, describing them as higher than expected by blaming wage increases for constraining the reduction of government spending, reflects active support for neo-liberal austerity and suppression of workers’ remuneration in favour of the agenda by the class forces that expected lower wage settlements, manipulation and undermining of collective bargaining. The paper does not say who expected wage increases to be lower than the settlements reached. Surely, it cannot be workers, broadly the working class, but capitalist bosses and their economists and agents in and outside the state. The attack on workers’ income is a class position.

The paper’s assertion that fiscal stimuli is counterproductive because of negative multipliers reverses causality. The fiscal challenges did not cause stagnation. Stagnation was the direct result of restrictive macro-fiscal and monetary policies that combined austerity or fiscal consolidation with high real interest rates that strangled investment and employment. Also, by treating the cost of capital as an external constraint that can only be managed through austerity, the paper denies the state its developmental role.

A high-interest rate regime and interest rate hikes that the paper uncritically embraces when it refers to the role that the South African Reserve Bank has played, especially in implementing the narrow policy of inflation targeting, directly undermines productive investment. Ironically, in the United States it is a mandate for the Federal Reserve, their central bank if you like, to ensure long-term moderate interest rates and to conduct monetary policy in a way that favours maximum sustainable employment. This makes sense because when the cost of borrowing becomes exorbitant, a significant number of small and medium enterprises, co-operatives and even large industrial firms are unable or find it difficult to expand productive capacity, which has been the case in South Africa.

The results include weak investment, factory closures, retrenchments and continued deindustrialisation. These are the very conditions that perpetuate unemployment and poverty and curtail the national fiscus. The paper’s silence on this mechanism highlights its ideological bias. It treats monetary policy as sacred and beyond question, even as its conduct undermines productive capacity potential and contributes to the factors that have caused and worsened macro-economic problems such as South Africa’s unemployment crisis.

The depiction of fiscal policy as a mere compensatory instrument designed to alleviate exclusion through transfers rather than transform the productive structure of the economy reveals a deep-rooted adherence to the neo-liberal model. Instead of calling for expansionary public investment to rebuild industry, infrastructure and employment, the paper insists on fiscal consolidation. This has been used to drive austerity. It is neo-liberal ideological paradigm maintenance presented in technocratic language to defend the status quo in the name of “growth through inclusion” or “growth and inclusion (GAIN)”

It is also problematic intellectually to attribute South Africa’s stagnation solely to collapsing state capacity and spatial exclusion while excluding macro-economic policy itself from scrutiny. The state’s capacity crisis is not independent of the macro-economic policy that has, for nearly three decades, constrained public investment, reduced developmental spending and made the state reliant on private capital for many roles. This is not a failure of governance only.

It is the predictable outcome of a policy framework that subordinates the public sector to the dictates of private profit interests and, broadly, the capitalist market. It is, for example, under the macro-fiscal framework promoted by the neo-liberal agenda that there were recruitment moratoriums imposed across all spheres of the government, affecting almost every department and public institution, including clinics, hospitals, schools and colleges, creating a massive vacuum of unfilled vacancies and thus weakening the state’s capacity to fulfil its mandate. In the police and other law enforcement authorities, austerity budgeting or fiscal consolidation has weakened the capacity to combat crime amid a rapidly growing population. This has contributed to high levels of crime.

What is required is a change in the macro-economic framework and sectoral, provincial and local economic development measures that will drive broad-based industrialisation and large-scale employment creation. The anti-Freedom Charter attack on state participation in the economy, in favour of competition by private profit interests facilitated through micro-economic liberalisation, privatisation and outsourcing, commonly referred to as structural reforms, including those targeting network infrastructure, can never be adopted by any revolutionary movement worth its salt. In any case, no revolutionary movement can serve as a transmission belt for foreign-determined policy directions, ignoring the voice of the masses of the working class and poor or stifling democratic policymaking.

The transformation needed must include a decisive break with the orthodoxy of fiscal austerity and restrictive monetary policy. Financial resources must be directed towards broad-based industrialisation, mass employment and broader social transformation.

The Reserve Bank’s core mandate must explicitly include broad-based industrialisation and maximum sustainable employment for South Africa to overcome the unemployment crisis and guarantee the Freedom Charter’s right of all to work in practice.

South Africa’s future lies in the hands of its people, not foreign-determined policy directions such as neo-liberalism. It lies in democratic planning and a revolutionary transformation of society in favour of the majority of the people, being the working class.

A genuine response to the unemployment catastrophe demands a radical shift in macro-economic policy. This must involve expansionary fiscal intervention, low and developmental interest rates, and the decisive mobilisation of public and social investment to build a truly inclusive and productive people’s economy. Anything less represents the continuation of failure.

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ISSUED BY THE SOUTH AFRICAN COMMUNIST PARTY,
FOUNDED IN 1921 AS THE COMMUNIST PARTY OF SOUTH AFRICA.