Should South Africa Trust the Free Market?

How can we trust South Africa’s development to the free market? While we can point to examples from elsewhere and from the history of free markets reducing unemployment and increasing prosperity, many South Africans are not yet convinced by this empiricism, they want something stronger, something that guarantees that allowing all South Africans – including strangers they do not trust very much, the freedom to act in an economic sense – will make their lives better off. This is particularly the case in this country, where a significant part of the population voted for almost half a century to keep down everyone else, on the basis of their skin color.
The starting point for addressing this question should be the difference between the actions of individuals as political actors and as economic actors. As political actors we speculate on the basis of a philosophy that has convinced us intellectually and usually feels right. We do things because of our value system; our sense of justice compels us. There is no accounting and usually no immediate if there ever is, for any gains or losses.
As economic actors, it is all about accounting. Philosophy takes a back seat, we are moved to act in pursuit of those things that we simply must have (not necessarily because these are required to sustain our lives or the lives of those we care about), we are making multiple decisions about how to allocate our time, our exertions, our thoughts, every second of every day. We also get feedback, to the extent that our desires are fulfilled, we know that the sequence of actions that led to that point was the correct one.
In politics, usually there will be one action, maybe once every 4 years in a voting booth. The cost of this action may be a day lost standing in a queue. The feedback might never come, if your action was the correct one your neighbors may still overrule this, and you get what you didn’t want, and the same goes if your action was incorrect. Not so in our role as economic actors; while we can be outbid in the market, we can still take actions as individuals to increase our bidding power, this is never possible in our role as political actors and in fact in the name of democracy, increasing your individual voting power (through paying others for their vote for example) is strictly against the law and for a good reason.
It is also possible to check out of the political process, not to pay attention to political debates, and not to vote. No one can check out of being an economic actor without giving up their life. Every choice we make, in a world of infinite choices, limited time, and limited means, is an economic one. It directly affects the quality of our lives. Therefore, every actor in the free market will constantly be attempting to maximize their outcomes, whatever this means for them.
It just so happens that other human beings are the best means available of reaching whatever ends one sets out to achieve. There is nothing quite like the human mind for solving problems, even in a world of artificial intelligence (AI) successes, nothing compares to the human brain, old as it is (more than 100,000 years old by some measures). And the only thing better than one human brain is 2, 3, 4 or more brains, no matter if your political philosophy tells you that certain brains whose possessors have a certain skin color are less useful than yours, through the imperative of taking action to achieve ends and the constant feedback one gets from the world it will soon become apparent that this is a counter-productive approach to life.
Perhaps your political philosophy tells you that female brains are less able to solve problems, and this causes you to systematically seek solutions to your problem through cooperation with other male brains. The inability to achieve your goals will soon teach you to try something else if for no other reason than desperation. It gets even worse, while you are systematically ignoring female brains as possible routes to a solution to your particular problem, others with similar problems will be making use of these brains due to the natural diversity of mankind, and these people will solve their problems quicker or otherwise more efficiently than the solutions you put forth.
In fact, it was really the free market that brought down apartheid, as predicted by economists when apartheid was still being proposed and while it was still young. It collapsed under its own inefficiencies. Apartheid was a war against the free market, especially on the free market for labor. To take just one example of this, state-enforced job reservation is only necessary if individuals would naturally do the opposite if left to their own devices. Measures like this led to the skills deficit that has been holding our economy back since those days. The current government, in adopting state-led “solutions” has been unable to solve these problems and has, in many cases, made them worse, that’s what happens when the diagnosis is incorrect and political action is used to thwart economic action in the free market. 

Mpiyakhe Dhlamini is a writer, programmer, and contributing author to the Free Market Foundation.

First appeared in City Press.

Photo by Douglas Bagg on Unsplash.