The future of the state

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The now-popular idea of a developmental state represents an emerging consensus that
we need an active state with the capacity to intervene in the economy to
coordinate and drive transformation. Implicit in this consensus is that
strategic state-owned enterprises are important.

Also implicit is that public servants, such as teachers, healthcare workers,
policemen and women are (or should be) a valued part of any developmental
effort.

If the state is to play an active developmental role, it needs to be able to
plan over the medium and longer term, to coordinate its own efforts while
mobilising the widest range of national energies, and it needs to be able to
monitor and evaluate what it is doing. Reviewing our own state reality, it is
clear that we have a long way to go.

The ANC national executive set up a task group to develop proposals around planning
and coordination. Proposals, which remain works in progress, were presented,
amended and broadly endorsed last weekend at the alliance economic summit.

In the first place the task group’s report focused on the need for an
institutional centre for government-wide economic planning. Modern societies
face complex challenges that cannot be dealt with in an ad-hoc manner.
Operating in a global environment with uncertainty and turbulence, a strategic
vision is required if we are to stay on track. Especially in a society such as
our own, facing obdurate and systemic challenges, transformation is likely to
take time and we need to remain mobilised and focused as a society on our big
challenges — job creation and sustainable livelihoods, education and healthcare,
community safety and rural transformation.

Planning by the state has, of course, been one of those things scoffed at by
the international neo-liberal onslaught in the past decades (unless it happened
to be strategic planning by the Pentagon). You can’t second guess the markets;
“leave it to them”, has been the mantra. But, as the eminently
liberal economist James K Galbraith argues in his recent book, The Predator
State, “the great fallacy of the market myth lies simply in the
belief, for which no foundation in economics exists, that markets can think
ahead. A country that does not have a public planning system simply turns that
function over to a network of private enterprise — domestic or foreign –
which then becomes the true seat of economic power.”

The alliance summit broadly endorsed the proposal for setting up a high-powered
planning commission in the presidency. It would need to develop medium and
longer-term strategic planning. It would need to ask challenging, cross-cutting
questions that often drop between the cracks. How will peak oil impact on South Africa?
Will we run out of water? It will need to assist Cabinet to assess
mega-projects strategically. Do we need aluminium smelters? We are not good at
posing, let alone beginning to answer, questions such as these.

But it is one thing to have high-level planning and risk evaluation capacity.
It is another thing to actually implement plans or take effective practical
measures to mitigate problems. It was for this reason that the Alliance Summit
looked at the institutional configuration of our national executive. We have a
relatively large Cabinet — 30 ministers running 37 departments. It is a
structure that has been inherited relatively unchanged from the past. To
overcome the dangers of dissipating coordination in a Cabinet of this size, a
Cabinet cluster system was introduced a few years back. By all accounts the
clusters have not functioned effectively. There is no hierarchy of ministers
within clusters. As a result, cluster plans tend to consist merely in the
agglomeration of separate-line department plans. There have also been problems
of deadlock, in which ministers disagree and there is no strategic override.

Additionally, there are 21 deputy ministers. In many cases (but not all) deputy
ministers are appointed because some departments cover an extremely wide and
demanding field. But the function and powers of deputy ministers are often
unclear. Some deputy ministers are involved in high-level functions (such as
trade negotiations at the World Trade Organisation) but have no original
powers. The relationship between a deputy minister and a departmental director
general is often fraught with difficulty. Does the director general have one,
two, or, in some cases, three political principals?

Then there are
questions of the configuration of national departments. Should a key strategic
challenge, such as energy, for instance, be housed within a single minerals and
energy department (with the additional danger that our energy policies will be
dominated, as they have been historically, by mining interests)? Why have we
grouped environmental affairs with tourism? Is it because addressing the
challenge of climate change is largely for the benefit of tourists? Other
departments appear to cover wide areas, perhaps too large for a single ministry
(trade and industry, for instance).

As we ask ourselves these questions, we are well aware that we find ourselves
in a transitional moment. This gives us the opportunity to ask questions about
departmental configurations without bumping too much into the problems of
incumbency. But the alliance summit agreed that, although we must be prepared
to act decisively, we also need to ensure reconfiguration does not end up
preoccupying us for the next five years to the detriment of actual
implementation.

This is the context within which we have dusted off a proposal that appears to
have first been mooted (rather quietly) in the policy unit of the presidency a
few years back — namely a two-tier national executive structure. Such an
arrangement is to be found in a wide array of countries, including the United Kingdom, India
and China.
In the case of the UK
there is a relatively small Cabinet with a prime minister and senior Cabinet
ministers (Cabinet secretaries, as they are called), and then there are
ordinary ministers (who are not in Cabinet) with their own departments, budgets
and bureaucracies. In other dispensations the senior structure is often called
a “council of state”.

In the alliance summit we have agreed to look seriously at proposing such a
two-tier arrangement for South
Africa. We could have a senior executive
structure, a council of state or, perhaps, we might call it a Cabinet working committee.
It would consist of the president, deputy-president, senior ministers
responsible for convening strategic clusters (for example, governance, economic
development, infrastructure, human development, social development and the
criminal justice system), as well as a few other senior ministers — finance,
international affairs and defence. These, I stress, are proposals for further
debate and refinement. To ensure that we are not creating more layers of
bureaucracy, the senior ministers coordinating a strategic cluster would have
line departments in their own right. One imagines, for instance, that the
minister of education might convene the human development cluster.

Below the Cabinet working committee would be, in terms of our Constitution, a
Cabinet consisting of all ministers. This Cabinet would possibly be somewhat
larger than it is now if we split up some of the rather too extensive current
departments. In terms of meeting schedules, we could shift the broader Cabinet
back into a once-monthly meeting, with the Cabinet working committee meeting
fortnightly and clusters every other fortnight.

There is a strong sense across government that, perhaps by default as a result
of the present lack of strategic coherence, treasury has become a tail that
wags the dog. As one senior political administrator put it to me, where there
is a lack of effective developmental coordination in any government, treasury
becomes the default position. Our developmental state certainly requires a
strong, disciplined and technically competent treasury, and we require
financial management and macro-economic discipline. But financial management is
not the same thing as strategic developmental planning. Treasury (working
closely with Cabinet) needs to set the macro envelope, but budgetary
allocations should be determined by strategic priorities. Where a major
priority has a weak departmental business plan or there is poor capacity, it
should not be the job of a treasury official to simply reject it or slice it
down, but rather to help, collectively, develop an adequate business plan to
ensure the realisation of the strategic priority.

To help achieve this, we envisage a much stronger role for the senior Cabinet
working committee in the budget process. To round the circle, we envisage that
the planning commission should act as a high-powered secretariat to this
Cabinet working committee.

Of course, reconfiguring the national executive and establishing a high-level
planning capacity in the state does not guarantee anything. Weak leadership or
poor policies can undermine matters. But, as Galbraith puts it pithily, to walk
away from this challenge and to rely on the markets is “to disenfranchise
the future”.

Jeremy Cronin is an ANC national executive committee member, MP and SACP deputy
general secretary