Perhaps South Africa’s approximation of Germany’s celebrated social market economy – which guided it to such enormous economic and social success after the war – could be the neglected 2013 National Development Plan dusted off, updated, refreshed and actually implemented.
Hanns Bühler, the foundation’s resident representative in South Africa, said “South Africa is facing an enormous economic decline” aggravated by the Covid-19 crisis. There was no blueprint which could be copied, because the contexts were different. “But we can learn from each other and we can share experience.”
Walter Eucken, the constitutional theorist of the social market economy, tried to answer Germany’s central “soziale Frage” of how to ensure the state addressed all the people’s needs by reframing the relationship between the state and the market – to achieve prosperity, social cohesion and democracy, while avoiding totalitarianism.Each side argued from a moral point of view for its values, while disregarding the values of the other side, he said.
Beckmann said Eucken had told the laissez-faire advocates that if one left the market to its own devices, experience had shown that it tended to form monopolies, cartels and the accumulation of economic power. That was Germany’s historical experience. “That limits freedom, but if you limit freedom and people cannot plan individually to do what they know is best, that will cause uncertainty and lower investment, initiative and prosperity.”
He said redistribution should also be framed correctly, not as simply taking money from the rich and giving it to the poor. Social spending on health likewise created a healthier and therefore more efficient workforce, to everyone’s benefit. Former finance minister Trevor Manuel responded unenthusiastically to the proposal that South Africa should follow the social market model. He agreed that Germany, under the social market economy, had done well in addressing major stresses such as post-war reconstruction, reunification and the costs of inclusion, including merging the currencies of the two countries.Germany had also weathered the 2009 global financial crisis and an influx of 1,5 million immigrants into Europe in 2015 and 2016.
And the real strength of German society was its high spending on social security, which was more the result of a social rather than an economic choice. That high spending, and the high German standard of living, were now coming under increasing pressure as the population aged.Other contributors to Germany’s success were its admirable life-long learning system, from kindergarten through school, and then to work apprenticeships.
“The main thing is the trust that the population has in the strength of the institutions and the maintenance of that culture.”Manuel said if Germany’s post-war culture had bred the social market economy, South Africa had developed a culture of instant gratification.