The anti-competitive collusion of the construction companies and bread manufacturers that manipulated the system and profited unethically has incited public outrage and created a new public awareness of why competition is important in the economy.
Participants in a healthy economy should know that market forces cannot and should not be controlled.
Nevertheless, good business people always exploit their networks and information to their advantage. Paradoxically, if advantages gained through opportunistic endeavour are to be sustained, business people must resist the temptation to manipulate the system and should instead invest their ingenuity to benefit the consumer and themselves, by producing higher-quality goods with less capital at lower prices.
This is the only way our economy will grow and create more jobs and stability to secure future prosperity.
Consistency in all government policies between what is espoused and what is done is essential if monopolistic and collusive behaviour is to be transformed into a sustainable culture of economic competition. So to succeed, the Competition Commission must form part of a coherent economic framework that does not accommodate policy and practice that conflict with its purpose, no matter how politically sensitive such policies may be.
The Mail & Guardian reported on September 6 that a black economic empowerment (BEE) deal by Gold Fields, designed to enrich the connected elite, would have been scuppered unless – as it in due course was – the stake offered to ANC chairwoman Baleka Mbete, a participant in the deal, was increased to 25 percent.
The aim was not to improve the productivity of capital or to ensure a fair chance to all potential investors. Yet the transaction was insisted on by the same party that purports to promote fair competition.
If the government was serious about promoting a competitive economy, the National Empowerment Fund (NEF) would stick to its mandate to fund small businesses whose owners lack resources and access to capital but have the necessary energy, drive and risk appetite.
It would not fund Khanyi Dhlomo – a well-born, highly educated, experienced and sophisticated professional – simply on the grounds that she is female and black. If the business case for her Hyde Park store was sound enough, Dhlomo should have raised the money through the banks.
The Gold Fields BEE deal and the NEF’s funding of Dhlomo is typical of the version of economic transformation that has created the non-competitive rent-seeking and collusive behaviour currently thwarting our economic progress.
In a fair and competitive economy, rules would be applied consistently for the common good. The institutions tasked with promoting healthy competition would challenge those who benefit unfairly and would deal with the unintended consequences of politically sensitive social policies that, while conceived with noble intent, have made economically irrelevant variables – such as one’s political allegiance and who one knows – more important than what one does and how one does it.
Moreover, the economy will grow and prosper only when loaded terms such as “transformation”, “empowerment” and “previously disadvantaged” are not used as euphemisms for crude redistribution, enrichment and being well connected. Only when we are brave enough to name things as they are will we be able to do something constructive about them.
The social and economic pact that has lately been mooted between the government, large and small business, organised labour, the workforce and society would get everyone working towards a commonly defined greater socio-economic good and would help build a successful future.
Yet how can we expect South Africa’s economic prospects to improve if, as basic a tenet of our system, the rules of competition are so unevenly applied?
How can we expect the workforce to trust the bona fides of the National Development Plan when the likes of the Gold Fields empowerment deal are being done, and wealthy and accomplished people are deemed to be worthy of an economic leg-up through the NEF?
Jonathan Yudelowitz is the joint managing director of YSA and author of Smart Leadership.