Try to Break Economic Rules and They Will Break You


The title of this article is, in fact, something I heard at a talk by the Chairperson of the Free Market Foundation’s board of directors, Ayanda Khumalo, on Saturday 27 February. He repeated it several times throughout his speech for emphasis, because it is something that we – even as libertarians – often do not remember.

no-free-lunchThe idea is simple: regardless of your political position or economic school of thought, the reality of how the economy responds to your actions cannot be averted. If you believe competition is bad and contrary to our interests as a species, that does not change the fact that we will compete regardless, even in the most restrictive economic model. If you, according to our personal conception of social justice, believe that we should have a minimum wage, that won’t change the fact that there will be negative effects throughout the economy, whether it is seen, or not seen, as Frederic Bastiat would say. The first principle in economics that substantial production will only follow upon a substantial incentive, will not be modified by the left’s ignorant assertion that altruism alone is such an incentive.

In South Africa, we have accepted leftist narratives. Unlike in the United States, being a communist is not considered civic blasphemy here. This is in large part due to the Soviet Union’s assistance to the anti-Apartheid movement, and the unfortunate unwillingness of the ‘capitalist’ West to fully condemn the authoritarian system of our past. Indeed, the Communist Party of South Africa is one of the partners in our governing alliance today. Our Ministers of Finance and of Trade and Industry, ironically, are Communists, and most unfortunate of all, our Minister of Higher Education is also one. The latter often writes long diatribe columns about the evils of ‘white monopoly capitalism’ and how a socialist South Africa would be wondrous. The fact that Apartheid was the result of a union between English socialists and Afrikaner nationalists escapes him.

But the Communists are not our most radical left-wing political party. To the left of our governing alliance is a very concerning entity called the ‘Economic Freedom’ Fighters (EFF). They claim to be fighting ‘for’ economic freedom, while we all know they are in fact advocating strongly against it. They want private banks, agriculture, and other ‘strategic sectors’ of the South African economy to be nationalized – without paying a cent in compensation to the owners. A young party, the EFF is already the third largest political faction in our Parliament, and seems to be gaining popularity by the day, especially among the youth. In the United States, the rising popularity of Bernie Sanders and his ‘democratic socialism’ (among the youth) appears to run parallel to this.

The youth agree globally: they are discontent with the status quo and are willing to take on the rules of economics directly. In South Africa, the leftists refer to these rules as ideological ‘neoliberalism’ – essentially a Western construct – which is not compatible with the African context. To them, if we ‘don’t do things like they do in the West’, we will be fine, because different rules apply here. They believe market competition is an unfortunate occurrence. African humanism (uBuntu) teaches us to cooperate and be humane through one another, they say. Western economic philosophy goes against this, and must be destroyed. So, therefore, they opt for Marxist-Leninism, a term they use to describe themselves. This is apparently not Western.

America is fortunate to have most left-wingers identify more with moderate Keynesianism than the radical brand of Marxism which South Africa experiences daily. But in both cases, their ideology does nothing much to help anyone, especially the poor they so passionately identify with.

Mr. Khumalo also said something else we all know to be true, but often forget when we miss the bigger picture. To misquote him: “History is a struggle between politics and economics. Politics tends to win, but only in the short-term. Economics always wins in the long-term”.

The message I want to convey to libertarians with this article is that we should keep the bigger, perhaps meta, picture in mind. Whatever the socialists try will fail. ‘Economics’ is not an ideology, and unlike something like libertarianism, cannot be damaged or destroyed. Pushing against the natural axiomatic rules of economics will make the leftist youth feel good about themselves. In South Africa, they will gain, like many of their parents (both black and white), ‘struggle credentials’, and in America, they would have successfully signaled their ostensible virtue to one another. But they are both tugging their respective countries down a slippery slope toward economic disaster: debt in the United States and a complete halt to economic growth in South Africa.

As libertarians we shouldn’t be happy about this state of affairs. Austro-libertarians warned of the 2008 financial crisis and were completely ignored, after all. But it should set us at ease, at least partly, because it inevitably means that once great tragedy has been experienced by the masses and especially the current leftist youth, those libertarians who were right all along would seem like the natural people to look to for leadership. This has proven correct in the United States where the libertarian movement is doing better than ever (non-electorally, that is). One can only hope this effect will occur elsewhere.

* Martin van Staden is the Editor-in-Chief of Being Libertarian.

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Martin van Staden is the Editor in Chief of Being Libertarian, Rational Standard, and Think Liberty. He has a law degree from the University of Pretoria. His articles represent his own views and beliefs, and not that of any of the organizations he is involved with.