Patrick Kuwana is the Founder of the Crossover Transformation Group. He is involved in leadership and entrepreneurship development in Africa and Asia.
Every day we are confronted with the reality that we need to rebuild our economy. Yet we cannot simply build on the same foundation as before: we need to reconstruct a new foundation before we can unlock the economic potential of South Africa. I want to share some thoughts on why and how the concept of justice should be included in this reconstruction.Â
Justice is fundamental to economic growth
In this context ‘justice’ basically refers to impartiality in our decisions and fairness in our actions towards others. I would take it a bit further though, and say that true justice conforms to what is morally upright or good. Injustice ignored will eventually crash an economy, but retributive justice (punishment for wrongdoing) incorrectly implemented will do the same. We need to recognise that currently our economy is hampered by (past and present) institutionalised injustice and that restorative justice needs to be implemented before we will be able to find sustainable solutions.
Justice can be a very emotive issue, and interpretations vary depending on ideology. Those who subscribe to capitalism view justice in one way, those who subscribe to communism or socialism view justice differently. Western culture, Eastern culture, African culture: everyone has their own understanding of justice. In South Africa, we, unfortunately, have a racially divisive history which causes us to often look at justice or injustice through a racial lens and can distort what we are trying to achieve. We, therefore, need to think carefully about what we include (and exclude) while we are reconstructing our economic foundation because whatever we put into the foundation will determine the strength of the building.Â
According to ancient wisdom, any great and lasting society will be built on four pillars: righteousness, justice, truth and mercy. So whenever there’s a situation of injustice, it should be dealt with by bringing truth to the table, and then applying both righteousness and mercy. If we can do this, we start a cycle of restorative justice. But if the truth is never brought to the table and injustice is never recognised, that cycle can never start. Or when the truth is brought to the table, but the response is one of punishment without righteousness or mercy, again there will be no cycle of restoration.
Productive households are fundamental to economic growth
The English term ‘economics’ is derived from the Greek word ‘oikonomia’ that essentially means ‘management of the household’. So when we’re talking about an economy, we’re talking about the management of a household. Africa as a continent is a household, South Africa is a household, a particular city is a household, your own home is a household, and all of these are economies in their own right. If we want to build a sustainable economy, we have to aim at the well-being and prosperity of everyone in the household. It is crucial that we enable generational prosperity for all who are in the household, not only for a particular group.
An economy is encapsulated by four main elements:Â
• Production: creating value through a product or serviceÂ
• Distribution: getting the product or service to those who want or need it
• Consumption: purchasing the product of service (the value) and using it
• Trade: the medium of value exchange (normally money).
In a sustainable (and growing) economy, the output generated by the value exchange is reinvested into assets that will increase the production within that economy. Capital should be reinvested into infrastructure, natural resources, and the most important asset of any economy: its people. The more productive people we have, the more we’ll be able to grow the economy.
How do we ensure we have as many people as possible in productive economic activity? We need to get the right legislative, monetary, fiscal and labour policies in place, to enable the well-being and prosperity of everyone in the household, and to stimulate reinvestment into productive assets so that the cycle continues to multiply and grow. We urgently need to curb corruption because it is sucking the life out of the economic cycle. Any economy that is built on greed, selfishness and pride is unsustainable. Any cycle that rewards laziness and corruption while punishing hard work and honesty is unsustainable. We cannot rebuild our economy on a foundation that controls, manipulates, and oppresses people. The only cycle that will bring about the growth we need is one that rewards hard work and honesty, that empowers its people to be productive in an environment of freedom.
Many of the principles we find in global economics today are based on a 1970’s theory by Milton Friedman, an American economist who proposed that the only social responsibility of business is to increase its profits. He stated that companies have no social responsibility to society: their only responsibility is to their shareholders. But after 50 years of building our global economy on this foundation (of sand) and seeing its negative effects, we’ve realised that business is not just about the shareholders. Business is about enabling the prosperity of the household.
So as we start to reconstruct our economic foundation, we have to:Â
•      Restore the hierarchy of value. This means getting to the point where we value people more than money, and we value relationships more than transactions.Â
•      Reverse the cycles of hatred. This means we have to go through the painful process of restoring relationships and healing the brokenness caused by exploiting people for financial gain (violation of the first principle).
•      Reverse the cycles of economic injustice. This means removing all forms of exploitation in the pursuit of financial gain. We need to disable any form of institutional favour towards one group over another and enable equal access to the available economic resources.Â
•      Include the excluded, the poor, the helpless. This means being intentional and strategic in bringing as many people as possible into productive economic activity. This is the only way that the cycle can begin to grow and to multiply, and to function in the way that it’s supposed to function.Â
•      Set up the right regulatory policy and systems of governance. This means that hard work and honesty should be rewarded, not laziness and corruption. We desperately need this in South Africa right now, because otherwise, the drain on our resources will continue.Â
A new mindset is fundamental to economic growth
As we start to see ourselves as part of one household (South Africa), we start to intentionally create opportunities for everyone to participate in increasing the prosperity of the household. When we aim at prospering others as a mechanism to prosper ourselves, when we aim at co-creating value and wealth rather than extracting value from others, it changes the way we approach business. Then we will begin to see an upward cycle of economic growth, instead of the current division and scarcity.
The more people in the household who are engaged in productive economic activity, the more likely it is that our economy will flourish. If 20%, 30%, 40% of our population receive social grants, our economy will not prosper. The real building of a world-class economy starts by building from the helpless upwards. If we can build an economy that brings prosperity to those at the bottom of the pyramid first, it will bring prosperity and wealth to the top. It will also close the unsustainable inequality which – if unaddressed – will explode and cause the entire economy to collapse.Â
We need a new governmental and institutional mindset towards our most valuable economic assets (our people). For example, is our education system equipping our people with the right skills to unlock their full potential, so that their potential can be harnessed for value creation and maximum contribution to productivity and also the increase of generational wealth? Likewise, does our healthcare system recognise that the objective of healthcare should be to keep our people as healthy as possible for as long as possible so that they have the maximum ability to contribute towards the productivity within the economy so that the whole household can grow?
I want to end with a call to action: how will you or your business contribute towards reconstructing our economic foundation and maximising access for all? Maybe you are successfully established in an industry that you can open up to those who haven’t had access to that industry. Maybe you operate in the venture capital space: will you release capital to those who could not access such capital before? Maybe you have assets or infrastructure that you can make available to co-create with those who have typically been disadvantaged. Perhaps you have influence in the education sphere, in the healthcare sphere, or the retail sphere. Let all of us who are already productive participants in the household find ways to bring in those who have typically been excluded so that they can also begin to participate. Let us start an upward cycle of economic growth and unlock a prosperous future for all South Africans.
This talk was presented at Nation Builder’s 6th annual In Good Company Conference (September 2020) which looked at “building back better”.
