Inequality – the real challenge that lies ahead in an increasingly unequal world

One could argue we have just survived the second and third threats, but the first looms large as we look ahead. 

Failure to address the poverty challenge in ways that go beyond the usual refrain of welfare support and job creation will reinforce the other two threats. Will we, once and for all, tackle the challenge of inequality? 

South Africa is one of 50 countries around the world where elections are taking place in 2024. In an increasingly uncertain world beset with seemingly intractable challenges – from climate change to a shrinking middle class, to rising levels of violence and geo-political instabilities – those who promise certainty become attractive. 

It is widely expected that the overall trend will be rightward – and not just a shift to the traditional right (“neo-conservatism”), but a shift into right-wing populism (“national conservatism”).

Martin Wolf, Chief Economics Commentator for the Financial Times, is currently hosting a five-part podcast on precisely this. 

In light of the Indian and Mexican elections, this depressing prediction needs to be moderated, but when looking at the Euro-North American landscape, it certainly rings true (think Trump, Orban, Le Pen, Meloni). 

In the Global South, Modi lost his parliamentary majority in India and the Congress Party did better than expected in what was a free and profoundly unfair election. 

The left retained its grip on power in Mexico. But it would be wrong to refer to a Northern rightward shift versus a Southern moderation – the return of a Marcos to power in the Philippines is a cautionary tale.

It is not certainty itself that is the threat to democracy, but the quest for certainty – the grand claims made by populists to return a country to a once golden era when things were better, or alternatively a return to a promise for a better future that has been betrayed. 

They are adept at coopting the traditional narratives of the left (including workers’ rights, welfare, redistribution) and combining that with anti-immigration tropes (including racism), nationalist passions, state interventionism to put right injustices, rejection of constitutionalism (when convenient) and a cult of personality that rests on the obsessive curation of the leader as a kind of divine or nationalist saviour. Modi, for example, started to claim during the Indian election campaign that his was a divine mission to lead India to greatness.

During the South African election campaign, it was the MK party and the EFF who repeatedly exploited the quest for certainty. 

Coopting elements of a left agenda (land, jobs, etc) into populist refrains about betrayal of the promises of the liberation movement and a cult of personality that fused leader and people, they were able to drastically reduce the ANC majority to way below what the polls predicted. 

It would be a mistake, however, to assume these narratives are new. 

Prior to the EFF and MK party breakaways from the ANC, these narratives were contained within what famously became known as the “ANC as a broad church”. Together, that “broad church” – inclusive of the EFF and MK party – won 64% of the vote, which is 1% higher than what the “broad church” achieved during the first democratic election! 

As Gwede Mantashe correctly remarked, the majority actually voted for the ANC tradition. The tactical missteps by the MK party and EFF after the election meant an ANC alliance with the DA, IFP and smaller parties was the only realistic option left for the ANC leadership.

When it comes to the third threat – that losers stop believing they have a chance of winning again – we have seen this emerge in a number of African countries over several years. The result is, inevitably, violence. 

This may be why there have been more governments of national unity (GNUs) in Africa than in any other world region – GNUs in Africa are about making sure the losers don’t turn to violence. The classic example was Kenya after the 2007 election. 

To call a governing alliance a GNU, the parties that represent the vast majority (80-90%) need to be included (like what happened in SA after 1994). South Africa’s GNU leaves out two significant parties (MK party and EFF), both of which romanticise the Armed Struggle. 

A variation on this theme is when losers reject the legitimacy of the election results – think Trump 2020 and Zuma 2024. Trump even attempted to provoke a popular revolt.

The speech that was read out on Zuma’s behalf at his press conference on Sunday 16 June contained a highly significant line that (as far as I am aware) has not been picked up in press reports. 

After referring to the decision to take up seats in Parliament and join the Progressive Alliance to fight the ANC-DA coalition from within, he referred to the formation of a Patriotic Front to extend “the struggle” beyond parliament. Fair enough. But then he said that the MK party will, via these formations, fight the ANC-DA coalition government (which he claimed is not a GNU) by all means available, “but within the law”. 

That, coupled with the announcement that they would take up their seats and campaign to win the next election, pulled South Africa back from the brink of violence. 

It is not hard to imagine Zuma contemplating initiating a KZN-based armed struggle – after all, the seeds were sown in July 2021. He threatened mass violence just before he agreed to resign from the Presidency after the ANC recall in 2018. And maybe, for some, he reiterated this call when at the end of the speech on 16 June he referred to the 1961 founding statement of MK – the ANC’s former armed wing – which states that “there comes a time when a nation must submit or fight”. 

Like then, he said, it is time to fight. Back then, that meant armed struggle. By claiming they envisage a struggle within the law, and by taking up their seats in Parliament, just maybe this time around it does not mean armed struggle. Time will tell. Zuma is, after all, a past master at abetting violence to achieve his ends, while firmly denying culpability. 

This brings us to the first challenge – the tolerance of poverty. 

Clause 8.3 of the Statement of Intent that the coalition parties have signed states that parties commit themselves to the following principle: “Social justice, redress and equity, and the alleviation of poverty.” 

Refrains such as this are common and there is agreement that not nearly enough has been done to eradicate poverty, unemployment and extreme inequalities over the past three decades. This has much to do with the adoption of a development policy paradigm that relied on fiscal policy to fund welfare (housing, health, welfare payments, etc), investments in infrastructure by state-owned enterprises (SOEs) and private investments to create jobs. 

From a development theory perspective, real human development and full inclusion cannot succeed if inequalities persist, or get worse, which is what happened.

When it comes to inequality, most South Africans and policymakers assume this is a function of unequal distribution of income – some earn too much, others too little or nothing. However, based on access to tax data, recent research shows that 90% of South Africa’s assets are owned by less than 10% of the population and that 80% of the population has no assets at all. 

Significantly, this data excludes family trusts, which are the vehicles that rich people use to hold their wealth – if taken into account, these figures would in all likelihood be even more depressing. 

Very little has been done to address asset inequality, not least because the rules of finance have been left largely untouched since 1994.

There is plenty of evidence that the rise of “techno-capitalism” is not only contributing to growing inequalities and the decline of the global middle class but may also be responsible for decoupling the historic relationship between democracy and capitalism, giving rise to a whole new mode of production that Yanis Varoufakis calls “techno-feudalism”.