South Africa does not have time to try “unsuccessful concepts” like nationalisation, said South African independent policy research and education organisation the Free Market Foundation (FMF) economist Vivian Atud in early November.

“The proposal by the African National Congress Youth League (ANCYL) to nationalise certain key sectors within the South African economy is based on a motivation to address the inequalities created by the previous dispensation,” said Atud.

She added the idea was that, once key strategic areas were in the hands of the State, the government would be in a position to more adequately address social inequalities.

The ANC took note of the proposal by its youth division and assigned a team of researchers to investigate a sample of 12 countries where nationalisation has taken place.

These countries included Chile, Norway, Sweden, Finland, Zambia, Brazil, Venezuela, Namibia, Botswana, Malaysia, China and Australia. Meanwhile, ANC alliance partner the Congress of South African Trade Unions has also called for the nationalisation of key sectors and has suggested that a further five countries should be included. These are Korea, Taiwan, Singapore, France and Scandinavia.

Atud presented a number of case studies in which nationalisation had not succeeded. Most countries privatised following nationalisation.

Countries that had nationalised and then returned to privatisation include South Korea, France, Sweden, Venezuela, Chile, Brazil and Zambia.

Meanwhile, Australia attempted to nationalise banks in 1948, but the High Court of Australia declared the act unconstitutional. The country has since promoted privatisation and deregulation and, through this, achieved improved productivity and increased growth and development.

The People’s Republic of China was a leading example of State capitalism, which showed that the most important ingredients of its economic success were privatisation, liberalisation and the implementation of proper management styles in the public sectors, with inefficient public corporations being sold or closed. Engineers rather than political ideologues run China’s nationalised plants, she said.

Further, Atud noted that no significant economic development took place in China during its exclusively planned and State-controlled economy, which it then liberalised.
Botswana and Namibia had State participation as opposed to nationalisation, which had been successful. The significant government spending financed through diamond revenues in Botswana was unsustainable though, said Atud. The economy needed to diversify in order to develop.

While the Namibia government had been involved in the development of its industry since the country’s establishment as an independent State, this involvement was not nationalisation.

Malaysia implemented an affirmative action policy favour- ing indigenous Malays and had become a highly successful export-led industrial economy. Atud said that it was the absence of nationalisation that had helped the economy to grow fast.

In Norway, the government saved three banks from collapse; this was a case of rescue nationalisation, similar to what the UK, the US, Iceland and the Netherlands had done. However, this was considerably different from nationalisation, which entails takeover by government.

Atud further stated that it had to be borne in mind that the 12 countries being studied differed significantly from South Africa in economic variables, such as population, consumer price index, unemployment rate, gross domestic product (GDP) per capita, the Gini coefficient and the GDP growth rate.

“There are no convincing records of nationalisation success. In all of the countries that implemented nationalisation, it resulted in decreased production, lower efficiency and undercapitalisa- tion of major industries,” said Atud.

She concluded that, to solve the country’s drastic unemployment problem and to grow the economy, government needed to hand back to its people the means to produce as much as they could, giving them freedom to work wherever and as hard as they could, as well as allowing them every oppor- tunity to profit from their endeavours.

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