The 'third world' challenge

In July 1988, the Development Society of South Africa held its third biennial conference at the University of Durban-Westville. The event, which was hosted and organised by the department of Geography, attracted delegates from all over the country.

One of the guest speakers was Mr RSK Tucker, managing director of the SA Permanent Building Society, who created considerable discussion with his address, 'The challenge of third world development for the South African business sector'. He pointed out that apartheid is a politico-socio-economic system, and that to change the political policy only would not solve South Africa's problems. He maintained that the legislature, which tends to be reactive, should be far more pro- active towards the country's many urgent needs, and he called for the business sector to see the economy as a single, integrated whole, rather than compartmentalised into first and third world segments.

The danger exists that South Africa will become one of the world's backwaters, he argued, and drastic steps must be taken to motivate the entire economically active population and make it more effective. The required transformation depends on freedom to be enterprising and also on the development of a community that is based on love for one's fellow man. The only viable way forward lies in abandoning of self-interest and in affirmative action aimed at inclusion, integration, participation and accommodation. In such a development programme, the business sector must play an interactive and supportive role.

The following extracts highlight some of his views...

My topic tends to lead one into precisely the trap which is implicit in the apartheid system and in most economic and business theory. It is atomistic, fragmentary and reductionist, tempting us yet again to treat the so-called 'third world' component (which might just as well be called the 'informal', 'black' or 'that other' component) as something separate and excluded. The fact is that South Africa has a developing economy and it is essential that we see this 'third world sector' as an integral part of that single, integrated, developing whole. Each subsystem depends on, is affected by and affects every other subsystem and the integrity of the whole economy. The challenge is to achieve the full wealth-generating potential of all the participants, thereby also achieving more harmonious and mutually supportive economic and social relationships.

Whether and how we can achieve such an economic transformation depends on the freedom of all participants to be enterprising. The Government is to be commended on the steps already taken to confer such freedom and should be encouraged to complete the reform. But unless such action is reciprocated at the grassroots level, through a vigorous process of socio-economic interaction and development, little or nothing will be achieved.

To a large measure the nature and success of that interactive process will depend on the business community's social vision and basic conception of the nature of man. The capacities and limitations of man and his function in society are seen differently by people with different visions. These visions may be grouped into two broad categories -described by Thomas Sowell, in Conflict of Visions - as the constrained and the unconstrained.

To the constrained vision, man is subject to such inherent constraints as intellectual and moral limitations, environmental and hereditary disadvantages and mortality itself. Adam Smith epitomised this view in that, with 'survival of the fittest' as the prevailing ethos, he attempted to determine how moral and social benefits could be produced in the most efficient way, within that constraint.

Constrained -V- unconstrained

In answer to the question 'who is my neighbour whom I should love as myself?', Christ told the parable of the good Samaritan. The person with the constrained vision would be inclined to re-tell it as follows:-The priest, the levite, the Samaritan and every successful businessman on the road from Jerusalem to Jericho that day passed by on the other side, knowing that any delay would result in expense escalation and profit deterioration. This would contradict the capitalist ethic and the responsibility to shareholders to maximise the return on their investment. More importantly, if everyone behaved in the same survivalistic way, business would thrive, more opportunities would be created and there would be no thieves and robbers on the road to Jericho in the first place. The lame and lazy would be taken care of by the Government out of the taxes levied on the travellers' profits. Thus, those who passed by on the other side were the ones who behaved in neighbourly fashion.

To the person with an unconstrained vision, man has the potential of directly feeling other people's needs as more important than his own, and therefore of consistently acting impartially, even when his own interests are involved. Thus, it is not only possible but highly desirable to motivate people on the basis of their actual or potential love of their fellow man. William Godwin epitomised this mindset in that he regarded the intention to benefit others as being 'of the essence of virtue' and virtue as being the road to human happiness.

Whereas Smith viewed human selfishness as a given, Godwin saw it as being promoted by the very system of rewards used to cope with it. The real solution lay in people doing what is right because it is right, not because someone 'has annexed to it a great weight of self-interest'. To the unconstrained vision, the parable of the good Samaritan remains valid and highly motivational.

Obviously, this dichotomy is simplistic and it is unlikely that anyone is totally constrained or unconstrained in his vision. But what is important is whether the prevailing ethos is one in which people are likely to act primarily out of self-interest, or whether sufficient people have potential to do what is right and good, without any self-interest.

In this sense the South African economic system is overwhelmingly constrained in its view of people's motivations, capabilities and differences. This vision tends to be strengthened by the role of the professional manager who is expected to behave totally 'economically' in delivering that which can be measured and compared. He is held accountable for profit, return on investment, growth and so on, rather than for qualities that are immeasurable.

Equality of result

To divert on the issue of equality, the constrained vision will seek equality of process - epitomised by laissez faire capitalism - while the unconstrained vision will look for equality of result. While such differences exist, the dispute on the issue 'all men are born equal' will never be resolved.

How then do I suggest that the type of integrated, participative economic order I have described might be established? Since the overwhelming majority of the business community see progress as being dependent on a systemic and essentially self-interested response to prevailing circumstances, and also view 'equality' as being equality of process rather than of result, the circumstances and environment have to be altered so that changed behaviour patterns bring about the desired transformation. Quite clearly, if nothing is done and everyone continues to behave in a purely self-interested way, it will take far too long to redress the lack of capital, the inadequate education, the absence of managerial skills, the inequality of opportunity and so on. For the economy to transform within the available time, we must change the process by influencing self-interest in both positive and negative ways.

The immediate reaction to a suggestion of this nature is complete shock and almost incredulity. We voice no opposition to distortions in process intended to promote stud farming, the expansion of the film making industry or investment in capital projects. Only when we suggest such moderation or distortion of normal systemic forces to benefit our fellow man is there a sense of outrage.

Part of the difficulty in implementing such direct incentives and compulsion is to design them so that the businessman works with rather than for the disadvantaged. For this reason I think that the corporate 'social responsibility' exercise has been misleading. The desired behaviour is that of the good Samaritan, who picked up the injured, cared for him and put him back on his feet. Tossing a spare coin to the injured man or giving him a fish helps, but not in the way that will result in economic transformation. Most social responsibility programmes tend towards coin tossing for, rather than developing with. Instead of 'social responsibility programmes we need corporations which behave 'responsibly towards society', having regard to the circumstances and needs of that society. The words are the same, but the intention and hence the results are likely to be very different.

I am therefore suggesting a programme of 'affirmative action' which results in the business community behaving in ways which are responsible towards society, even though this is not normally in their short-term interest. Merit is important in a free enterprise system and affirmative action should only assist the underprivileged to get to the starting post so that they can actually compete. Unmerited appointments or contracts amount to 'tokenism ', which is entirely counterproductive.

Affirmative action

If this affirmative action programme is to succeed, the disadvantages that must be redressed include denial of the prime opportunity to accumulate capital through land ownership; relatively indifferent education, on which R1 has been spent against R9 for a white child; language disadvantage because commerce employs English and Afrikaans; environmental and social disadvantage; and, at the very least, subconscious prejudice. It certainly would not be the first time this country has embarked on massive affirmative action to assist a disadvantaged community in getting jobs, improving education, redistributing capital and so on.

Such a programme is necessary because of the prevailing ethos, but there are a vast number of people who are powerfully motivated by an unconstrained vision and genuinely Christian ethic. It is therefore regrettable that, instead of receiving encouragement, their commitment is ridiculed as being sloppy, unrealistic and perhaps even 'playing into the hands of the ANC'. There is no reason why a systemic process influenced by affirmative action should not run comfortably parallel to unselfish action in the sole interest of assisting and uplifting others.

To bring about the necessary integration, upliftment and transformation, it is imperative that the systemic forces determining the behaviour of those with a constrained vision be moderated and that sustenance and encouragement be given to those with an unconstrained vision.

In conclusion, l say that what is needed are businessmen who see the next five years as the first five years, and not as the last five. We can do without those whose sole interest is to derive the maximum possible material gain out of the system before the lights go out. This is a land of unlimited opportunity and beauty for those who are motivated to serve, whether it be through systemic processes or directly by quantum leap.

(From : The year at UDW 1988)