Do we want Freedom or Failure?
What the country needs is not further entrenchment of statist orthodoxy, but a decisive turn toward liberty.
Written by: Eustace Davie
What South Africa requires is not a resurrection of discredited old economic dogmas, but a principled commitment to economic freedom, institutional reform and individual empowerment. In short, it needs not more planning, but more liberty.
In New Agenda (Issue 93), Dr Seeraj Mohamed revives a familiar refrain: South Africa’s economic stagnation, marked by high unemployment, persistent inequality, and deindustrialisation, is the consequence of “neoliberal” reform.
Salvation lies in a return to the interventionist ethos of the “developmental state”. He proposes a litany of statist remedies: greater central planning, state-led investment, capital controls, redistribution, and fiscal expansion. Yet this vision, though cloaked in the language of transformation, misapprehends the historical record, misdiagnoses the roots of economic malaise, and fails to reckon with the institutional constraints of the South African state.
The myth of South African neoliberalism
Dr Mohamed’s central thesis rests on the claim that post-apartheid South Africa adopted a “neoliberal” economic model. This oft repeated assertion is not borne out by the empirical record. Far from embracing a free-market paradigm, the state entrenched a highly regulatory regime: labour markets were ossified by union influence and legislative rigidity; barriers to entry proliferated through excessive compliance obligations; and the reach of the state expanded rather than contracted.
This was not liberalisation but dirigisme by another name. South Africa’s economy became increasingly centralised, its business climate less predictable, and its private sector constrained by a growing web of regulatory intervention. To characterise this trajectory as “neoliberal” is not merely misleading, it is entirely historically and conceptually erroneous.
Deindustrialisation and “financialisation”: State failure, not market excess
Dr Mohamed identifies “financialisation” and the decline of domestic manufacturing as symptoms of unrestrained market forces. In truth, these are the natural consequences of an environment marked by policy uncertainty, infrastructural decay, and diminishing state competence.
Investors, both foreign and domestic, have not abandoned productive sectors because of ideological zeal for finance, but because the cost, risk, and complexity of doing business in South Africa have become prohibitive. It is not an excess of market freedom that has driven capital to safer domains, it is the rational response to deteriorating governance and regulatory overreach.
Assertions that South African firms are engaged in widespread rent-seeking behaviour go completely unsubstantiated. Multinationals such as Naspers, BAT, and Anglo American are global by design, not by opportunistic retreat. Likewise, the modest entry of retail groups into financial services should be welcomed as competitive diversification, not condemned as evidence of structural distortion.
Misapplying the East Asian model
Dr Mohamed looks to the East Asian developmental states, namely Singapore, South Korea, and Taiwan, for inspiration. Yet he fails to acknowledge that their success rested not simply on state activism, but on disciplined institutions, technocratic competence, meritocratic bureaucracy, and an unwavering commitment to legal certainty and transparency.
These states operated within rules-based systems that incentivised performance, restrained rent-seeking, and ensured accountability. By contrast, South Africa’s public institutions have repeatedly demonstrated an incapacity to discharge even the most elementary core administrative functions. State-owned enterprises are in crisis; regulatory bodies are politicised; and corruption is endemic. To invoke the East Asian experience without replicating its institutional architecture and discipline is to profoundly misunderstand the source of its success.
Redistribution without growth: A mirage of justice
Redistribution lies at the heart of Dr Mohamed’s economic programme. Yet redistribution in the absence of wealth creation is a hollow gesture. It does not elevate the poor; it merely reallocates scarcity. Without a growing economy, redistribution becomes a zero-sum exercise, sowing social discord without generating either opportunity or wealth.
The foundation of economic justice is not the handout, but the enabling environment: secure property rights, enforceable contracts, access to markets, and unrestricted enterprise. These are the pillars upon which individuals build lives of dignity and prosperity; through self-determination, not through permanent dependence on state largesse.
A deafening silence on labour reform
Perhaps the most glaring omission in Dr Mohamed’s analysis is the question of labour market reform. South Africa’s rigid labour laws are among the most punitive in the developing world, disproportionately harming small businesses and excluding precisely those whom economic policy ought to prioritise: the young, the unskilled, and the marginalised.
These inflexible laws prevent job creation, disincentivise hiring, and criminalise consensual employment contracts that deviate from rigid central standards. Any strategy that seeks to reduce inequality, yet refuses to liberalise the labour market, is both intellectually indefensible and fundamentally unjust.
Examining the pillars of Mohamed’s economic programme
Each of Dr Mohamed’s core proposals reflects a misplaced faith in state capacity and a failure to appreciate the perils of interventionist overreach.
On market concentration: Concentration is most often the reward of efficiency and innovation. Rather than penalising scale, the state should remove entry barriers and ensure competitive neutrality. It is dynamism, not dirigisme, that empowers challengers.
On development finance: The track record of state-directed investment is replete with costly misallocations. Bureaucrats are ill-equipped to substitute for the information signals embedded in private capital markets. The proper role of the state is to create a stable, rules-based environment in which private investment flourishes.
On fiscal expansion and inflation targeting: The abandonment of inflation targeting in favour of fiscal expansion, advocated by Dr Mohamed, mirrors the failed policies of Argentina, a nation now attempting to claw its way back from the brink through extensive deregulation and monetary reform. Price stability and fiscal prudence are not “neoliberal” affectations; they are preconditions for sustainable growth.
On industrial policy: Government attempts to pick winners have consistently led to rent-seeking and dependence, not to dynamism. True transformation emerges from market competition, not administrative fiat.
On the developmental state: The model presupposes a level of institutional competence that South Africa palpably lacks. In the present context, further expansion of state control would only deepen inefficiency, waste, corruption and collapse.
The liberal alternative: Freedom as a framework for flourishing
South Africa’s ailment is not insufficient planning but an excess of intrusive and coercive government, poorly executed. What is needed is not a new model, but the political will to apply enduring and time-honoured principles: the rule of law, limited government, economic openness, and the protection of individual liberties.
These are not abstract ideals, but practical imperatives. The evidence from high-growth economies, whether in Eastern Europe, East Asia, or Latin America, demonstrates the transformative power of economic liberalisation. Where individuals are trusted, markets opened, and enterprise unshackled, prosperity ensues.
Toward a freer future
Dr Mohamed’s economic vision, however well intended it may be, is grounded in flawed assumptions and buoyed by misplaced optimism in state capability. His model has been repeatedly tried and found wanting in one country after another. South Africa cannot redistribute its way out of poverty and into growth, nor plan its way to innovation.
What the country needs is not further entrenchment of statist orthodoxy, but a decisive turn toward liberty: freedom to work, to build, to invest, to own. It is through liberty, not the dead hand of bureaucracy, that the nation will rise. The challenge is not technical but philosophical, whether South Africa will continue to wager its future on the exhausted ambitions of a tired state, or whether it will at last place its trust in the creative energies of its people.
The time for that choice is now.
Eustace Davie is a Director of the Free Market Foundation and author of Unchain the Child.