By Bongani Mankewu
As a means of understanding Public Private Partnership (PPP) legislative concerns, Krumm (2016) introduces the concept of privatised Keynesianism, first proposed by Crouch (2009).
Privatised Keynesianism was designed to ease the government off of its overall economic commitments. In South Africa, our faith seems to be in the recently formed National Energy Crisis Committee (Necom) and the National Logistics Crisis Committee (NLCC), both of which are dominated by special interests.
South Africa's persistently anaemic economic situation can be revived through PPPs, even though they aren't the panacea. It is vital that public sector representatives have the expertise and experience to negotiate with astute profit-driven private parties.
Keynesianism, like PPPs, often has its roots in private enterprises before becoming privatised and evolving into a common good. Due to Agency Theory's emphasis on and prescription of the common good, citizens are required to cover the costly debt.
Just as South Africans are still repaying debt from Transnet's recent rolling stock of 1064 locomotives, the nation is also saddled with debt from Eskom's construction of power plants, amounting to over R400 billion. There is a social and economic collapse in the country due to a lack of electricity, while Transnet lacks efficient trains and railway lines to transport export products to the arteries of global trade.
One crucial aspect of conflict of interest that the public sector needs to comprehend is how it leads to banks' reckless behaviour. Transaction cost and expediency play a significant role in their decision-making, causing them to ignore the checks and accounting procedures they should adhere to. However, this interest-driven financial strategy is particularly disguised in PPPs because the ventures and the future reimbursement obligations are not detectable in public records.
The key objective of privatised Keynesianism is to have governments pull out of general obligations regarding the economy. Public actors need to understand that multilateral finance institutions avert bankruptcy when they extend credit to borrowers. Their view would be that contracts are sacred and should not be violated.
PPP obligations are not recorded in public records, which could lead to private participants disregarding them completely, which would violate the social contract, an even more significant contract. Multilateral financing institutions provided funds to governments in order to bail out foreign creditors who hadn't performed due diligence when lending. In the end, we are left with austerity budgets without any clear explanations.
Praise be to the private sector for assuming responsibility for assets intended for the common good of society as a whole, we must also be mindful that privatised Keynesianism is necessary to sustain financialisation — the financial actors' control over the economy. The “Privatised Keynesianism” of contemporary economies links the roles of less developed countries as exporters and recipients of foreign investment.
Similar to privatised Keynesianism, enormous amounts of entirely imaginary goods are created, and these goods' nominal values are used to leverage even more of the bad debts that fund the bad debts. In a similar vein, PPP finance of infrastructure prioritises political expediency over commercial viability. This is the current state of affairs at Transnet: an R130bn debt that needs to be repaid through bad debt or limitations on the company's ability to borrow money to finance its operations.
The PPP and/or concessions are ideal models for our economic conditions but should we have public representatives who blink indefinitely in those negotiations, industrialisation, and social revival from the ongoing economic turmoil will remain as elusive as the proverbial holy grail.
The Meiji Restoration of 1868 in Japan, which began massive industrialisation under the motto fukoku kyōhei (enrich the country, strengthen the military), is indispensable for South Africa.
Itō Hirobumi wrote to fellow Meiji leader Kido Koin, “If we cannot rule at home, we will be unable to set matters to right abroad”. Sovereign hegemony of government should not be subcontracted to the private sector in a constitutional democracy.
Bongani Mankewu is the Director of the Infrastructure Finance Advisory Institute.
BUSINESS REPORT