The Free Market Foundation (FMF) is heartened by recent press reports of the Venezuelan government relaxing its controls over the economy. This comes after the government of Zimbabwe also in recent years signalled its intention to open up for business and set right the disaster of Mugabe-era land grabs. South Africa would do well to take heed of this trend away from socialism toward freedom.
S&P Global reported in April 2020 that a government-appointed commission in Venezuela had recommended that the State abandon its control of the country’s oil industry, and allow private and international investors to take the lead. A CNN report from December confirmed that Venezuela had also largely ceased its gasoline subsidies, and that for the first time since the early 2000s allowed a private company to issue bonds in dollars, thereby allowing it to raise money without government involvement.
More recently, Bloomberg reported on 12 February 2021 that the Venezuelan government was privatising (though in a limited fashion) dozens of State-owned enterprises in the chemical, agricultural, and tourism sectors. This comes years after Hugo Chávez, the former President of Venezuela, expropriated thousands of private companies, farms, and other properties.
The CNN report noted that more than five million Venezuelans had fled the economic conditions created by years of socialist policy, and that 96% of Venezuelans live below the poverty line. Expropriation of private assets, even if it is said to be in the public interest, has clearly failed to deliver on its promises. South Africa must learn from Venezuela’s mistakes.
It is therefore unsurprising that the most worrying aspect of South Africa’s embrace of socialism is its policy of expropriation without compensation. Parliament is considering a constitutional amendment to allow government to seize private property without being required to pay for it, depriving South Africans of a long-established common law right to compensation that was finally constitutionalised in 1994. Parliament is also considering an Expropriation Bill that makes it unacceptably easy for government to expropriate property, whether with or without compensation.
Chris Hattingh, FMF Project Manager, said, “The South African government is now virtually alone among the administrators of the open and democratic societies of the world with its agenda to centralise economic control and deprive South Africans of their hard-won property rights.” Hattingh said those governments that fail to abandon immoral policies – that perpetuate government control over citizens, especially the poorest – will never be able to substantially improve living standards or the average quality of life. “Stripping away property rights will only undermine progress that has been made, and will never unlock the real radical economic growth and transformation for which South Africans hunger.”
The Zimbabwean government last year announced it is interested in discussing the return of agricultural properties to the victims of its own policy of expropriation without compensation from the early 2000s, or at least paying compensation. As recently as 17 February 2021, a Zimbabwean government spokesperson was quoted by the press as saying no more land grabs, whether by private citizens or the government, would be tolerated.
Whether the Venezuelan and Zimbabwean governments stay the course to liberate their economies from State burdens remains to be seen. That they have abandoned the pretence of socialism is, however, a hopeful start.
“We must not forget that the National Party abandoned the rhetoric and ideological zeal for Apartheid many years before Apartheid itself ended,” added Martin van Staden, FMF Executive Committee member. “It is therefore always a good sign when authoritarian governments at least stop holding out their authoritarianism as morally, economically, or socially advantageous.”
The FMF will continue to advocate for a free society underpinned by personal and economic liberty, where everyone’s private property rights are respected. Only this can deliver prosperity and transformation for the poor.
Issued by Free Market Foundation