Annual Report 2005

SANE
NPO registration number: 012-739NPO
Trust registration number: IT2904/99
PO Box 23760, Claremont 7735
Cape Town, South Africa
Telephone +27 (0)21 762 5933
Telefax +27 (0)21 762-2422
Website: sane.org.za

The mention of New Economics may still cause the elevated eyebrow in some quarters. But it is urgent that new ideas and new practices are researched and advocated with the body politic in South Africa.

Not withstanding unprecedented prosperity and opportunity in many parts of South Africa, far too many people are directly affected by persistent poverty, conflict and unfulfilled human potential. These problems of poverty and conflict undermine efforts everywhere to create peaceful, just and prosperous societies.

It has become imperative that the purpose of the economy must be to increase the chances of all life to fulfil its potential. And that wealth is distributed and shared in a way that everyone;s needs are met. If not, economic insecurity will continue to increase and economic and social injustice will continue to prevail.

Fortunately, an international consensus, in the New Economics movement, is emerging about how to address these challenges. New Economics is a train of thought beyond the limits of conventional economic understanding and SANE exists as a vehicle through which such practices and policies are promoted.

SANE depends in large part on support from donors and partner organisations, and has received funding from Ford Foundation, the Embassy of Finland and the Canon Collins Educational Trust for Southern Africa for the 2005/6 project year. SANE has also received support from individuals and is in the process of developing a ;sustainability initiative;, aimed at securing its long-term viability. We hope that this will make us less dependent on donor support for our core functions, but of course donors and partnerships will continue to be the main source of community projects funds for SANE.

Richard Calland
Keith Vermeulen
Zunaid Moolla
Joe Mwase
Langa Zita
Margaret Legum
Karen Jordi
John Roux
Norman Reynolds
Margriet Knaap
Tim Jenkin
Ruth Mattison
Johan van Zyl
Jenny Ibbotson

SANE, with the new economics movement globally, operates on three levels
• It seeks to understand why the current process of creating and distributing wealth entails, globally, less employment; deepening poverty; widening inequality; voter apathy in democracies; societal and personal alienation and breakdown – mental illness, crime and domestic abuse. Plus an apparent inability to deal with – even to face – global climate change, environmental degradation and an impending energy crisis as the stocks of fossil fuels collapse relative to demand. And the danger of a global financial bubble burst as the artificial value of the dollar falls. All of which fuel the danger of violent uprisings and terrorism.
• It proposes ways that nations can co-operate to challenge and change that global dispensation; and ways that national governments and their electorates can protect themselves from those global processes to promote a more equitable and sustainable political economy.
• It introduces local economic development alternatives to sustain and advance communities as they struggle to survive the global impoverishing dynamic. Thus it seeks economic, political and social localisation as the essential humanising antidote to the toxicity of inappropriate globalisation.

Since its inception, SANE has operated largely at the first two levels. For the first time, 2004/05 saw us attracting the funding to begin our work seriously at the third, local, level. Our Director, Vanessa Witbooi- Johnstone, very new at last years AGM, has achieved funding for two exciting and innovative projects.
They are:
1. A Municipal Time Bank Concept:
The Overstrand Municipality in Hermanus is running this project in partnership with SANE and the Embassy of Finland. The Time Bank Project enables indigents residing within the boundaries of the municipal area to exchange work for municipal debt or services. Indigents reduce their debt or pay for services with work, and the municipality reduces its deficit to the extent of the value of the work received. A record is kept of the transactions between the participants and the municipality. The Time Bank is a type of Community Exchange System which is operating in many countries around the globe. The benefits are that people work for each other and their communities. This encourages people to identify and use their skills to meet local needs, and builds the localeconomy and community. It compensates for cashlessness.
2. Economic Education and Spreading the Community Exchange System (CES) to poor communities.
In this project we provide new economics education to stakeholders from sectors like NGOs, CBOs, faithbased organisations and local government. The intention is to assist these sectors in the understanding and building of a new level of economic literacy using theory and discussion and SANE’s innovative Community Exchange System (CES). We hope to test not only the level of acceptance of new economics ideas but also the readiness of communities and the different sectors to overcome race, class, occupation and education barriers through this programme, called New Economics for Social Change. This project is carried out in partnership with the Ford Foundation of Southern Africa.

Local authorities around the Cape Town Metropole and the region are watching these two projects with interest, as well as the accompanying monitoring and research, both of which are built into them. 3 Based on this interest, SANE will convene a bimonthly LED Forum, bringing together NGOs and CBOs, local government and academic researchers to share new ideas and co-operate in creating new solutions.

SANE has continued to inspire, promote and support new thinking about the political economy, and to seek new paradigms.
• SANE-Views has a subscription of 1 506, who receive a mailing roughly once a fortnight. These mailings include the writings of Board members as well as those of other local and international new economists. SANE-News goes out to 653 people, about once a month, informing them of events relevant to new economics in SA.
• In May 2005, we hosted a visit by the California-based author, academic and fuel scientist, Richard Heinberg, known to many as the author of the Museletter. He spoke several times each day, to lively public meetings, academic seminars, government officials and public broadcasters about the prospects facing the world as a result of the decline in the availability of oil from two to three years hence. Richard and Janet, his wife, spent a week in Cape Town and another in Gauteng. His visit was powerfully assisted by a committee comprising Peter Willis, Director of the SA office of the Prince of Wales Programme for Industry, Peter Vernon, Aart De Lange, John Raimondo and Russell Bishop. Heinberg’s influence is sure to be felt increasingly as the months pass.
• A regular SANE Think Tank has been formed. Starting with Board members and close associates, it provides a forum for dialogue on new ideas and new developments. Out of it we expect to develop a research programme. One idea is a series of SANE Fellowships at SA tertiary institutions.
• Board members Margaret Legum and Norman Reynolds have been published in the national press and heard on radio, both in analysing the current paradigm and in proposing new solutions.
• Invitations to speak on new economics suggest there is a new sense that the political economy is not only the essential context in which everything else either sinks or swims, but that the current paradigm severely limits advances in all spheres. Such invitations include conferences on education, on BEE, on corporate social responsibility and on environmental sustainability, as well as at the more expected business schools.
• In November SANE will run its first residential three-day New Economics seminar. Funding from the Canon Collins Educational Trust in London will enable us to offer somegenerous bursaries so that lack of access will not prevent participation. The purpose is to explore new ideas and build a knowledge base with future partners.

SANE has continued to develop new links with potential allies and partners. They include IDASA, Sangoco, the BIG Coalition, the Parliamentary offices of the SA Council of Churches, COSATU, Southern Cape Land Committee, Biowatch and the City of Cape Town.
The New Economics Foundation in London and FEASTA in Ireland are international partners from whom SANE receives new thought and new research. We are the only gateway to South Africa for that new thinking. Members, friends and academics have access to their publications at the resource centre at the office.

Thus far SANE has not had an impact on government policy-making as far as we can see. At any rate there is scant dialogue between us.
What would it take for a dialogue to develop between SANE and the adherents of the neo-liberal global market movement, including the government? SANE believes it can show that the present economic system actually militates against poverty alleviation, and that governments must take action to change the nature of that system. The neo-liberal movement believes, by contrast, that that system is the most effective and democratic way to bring prosperity to everyone, including people who are now poor.
It seems hopeless to expect these views to find resolution. Yet we think there is real yearning on the part of both movements for two things. First, for peace between us in the sense of our working together to extend our political democracy to the economic sphere. Second, for an economic system that is fair, inclusive and sustainable, in which all human beings can both contribute and benefit from the material fruits of the country, and which is based upon free market, rather than command economy, principles.
I wonder whether such a dialogue could start from an acknowledgement, from SANE’s side, that the South African government has done wonders in the economic sphere, given its enforced participation in the doomed global unregulated competitive market.
• Done wonders? Apart from preserving the confidence of extremely powerful and potentially destructive vested interests, the government has made huge advances in spreading health, education, water and energy supply, transport and policing from a small minority of the population to all of it. It has also made strides in combating crime and corruption, endemic in the apartheid regime and its public service. It has done this without provoking racial violence, while racially integrating society across the board from schools to sports to boardrooms, despite continued racism – more politely described as ‘Afro-scepticism’, and despite the fact that both the Minister of Finance and the Governor of the Reserve Bank are Black and have a militant history in the ANC struggle.
• Enforced? At the height of the global triumphalism of the neo-liberal movement, we achieved our liberation. There was no successful country holding out against that tide. The national and multinational corporate sector explicitly required our new government’s espousal of the open globally competitive ideology, on pain of capital desertion and with three months’ worth of foreign currency reserves in the Bank. It is hard to see how they could have refused.
• Doomed? The globalised market in trade and capital needs constant economic growth, if it is not to plunge into recession. That cannot happen, if only because the necessary fossil fuels are running out. 5 A financial crash based on a huge speculative dollar bubble, with catastrophic global results, may also be unavoidable.
• Unregulated? The competitive free market is excellent for innovation, creation of technology and ingenious solutions. It rewards individual entrepreneurship and is also ruthlessly self-serving; and it disadvantages humane activities outside of the market, like child-rearing. It creates hierarchies of power based on individual wealth, which if not regulated will become abusive and self-destructive. If they are regulated they can continue to produce the golden eggs.
I wonder also if agreement might be reached on the following understanding on the values base of each approach.
The neo-liberal is essentially and inevitably individual and not collective. It is assumed that when individuals act in their own interests they also serve the interests of everyone.
Thus it is government’s job to create an environment in which individuals can advance their own interests – meaning the accumulation of property and income – and that will automatically help everyone.
The New Economics idea (‘as if people mattered’) is that individuals are served only in an economy where everyone else is also served. Ubuntu is the real core of New Economics. It implies that if a political economy has the effect of excluding anyone, that aspect of it must be changed; and that if accumulation by some results in exclusion of others it must be stopped. You cannot espouse ubuntu as well as an excluding system. Ubuntu is often used, in the neo-liberal dispensation, as a sentimental backward nod at African culture as it was but is no longer expected to be. For us, it is the essential underpinning of our values.
Might a dialogue be served by a discussion about which of these two understandings about the nature of people is closest to the truth, and what policies follow?

‘The worst off in this country live impoverished lives … impoverished not simply in relation to the better off in Britain, but in relation to their own parents and grandparents’ (from Mind the Gap: The New Class Divide in Britain by Ferdinand Mount). Moving from values to practice, it is worth asking questions like these that challenge accepted theories about the causes of poverty:
• If the most advanced nation in the world – the US – is losing jobs, and poor people in Britain are worse off than their foreparents, where is the evidence that our unemployment is caused by lack of skills and the apartheid legacy?
• If we really knew for sure that the neo-liberal paradigm cannot alleviate poverty, because it inevitably creates jobless growth, what policies would follow?
• If we knew for sure that SMMEs cannot absorb people made jobless by big business, how much emphasis would we put on them?
• If we knew that we cannot compete with China’s dumped mass produced over-runs in the clothing industry – even if we dropped our wages by nine-tenths – what policy would we adopt towards imports of Chinese clothing and textiles?
• Why should we expect politicians in northern countries to attack their own constituencies by ending protection for their industry and agriculture?
• In the past 40 years the world’s gross domestic product doubled; while inequality tripled. Since that was not consciously intended, how will it change without changing the system?

EMPLOYMENT IN THE FREE MARKET
All free enterprise economies have two distinct areas of employment:
• the market sector where employment arises from meeting the demand for goods and services for direct monetary exchange; and
• the service sector where employment arises from the offer of ‘common’ services to the public, paid for from public funds. These two sectors have always been mutually dependent. Neither can do without the other. It has been seen as a matter of balance.
• Mainstream free market theory has traditionally designated the market sector ‘productive’; and the service sector necessary but essentially parasitic, since it needs to be funded from taxation on the market sector.
• Leftist political theory has emphasised the ‘commons’ or service sector as creator of equality, a caring society, and civil values.

SERVICE SECTOR
Supplies the goods and services that it is in everyone’s interests to have, but in no one’s interests to supply for profit.

Employs people for:
•Democracy: public representatives and policy makers at all levels of government; law-making regulation.
• Public service: national, provincial, local and parastatal.
• National defence: army, navy, air force, fisheries and coastal protection.
• Public health: infrastructure and health professional staffing, epidemic containment, disease control and research.
• Water and sewerage: provision and infrastructure for supply.
• Education: from educare to post-tertiary to occupational training.
• Transport: roads, railways, busses, airports.
• Energy: policy and implementation: infrastructure for delivery; includes oversight of private energy interests.
• Safety and justice: police, courts, prosecution, prisons, offender rehabilitation.
• Public housing: sub-economic, planning and street layout, licensing.
• Public provision: public spaces, libraries, beaches, amenities, national stadiums, sports and encouragement of arts.
• Social services: preventing family abuse, child care, youth and aged services.
• Promoting sustainable environment: policy and practice, recycling, renewable sources of energy, protection of habitats, and climate change policy.
• Not-for-profit organisations: NGOs, CBOs, community organisations – those who deals with dysfunction, enhance communities and protect the habitat.
Characteristics
• Labour (people) intensive: machines cannot replace people.
• Employment creates demand for market sector goods and services.
• Creates new human capital, and subsidises non-employed people.
• Requires humane qualities: sense of humanity – compassion, co-operation, judgement, healing, reconciling characteristics, non-competitive personalities.
Problems
• No direct payment between provider and beneficiary: requires public or donor funding derived from elsewhere.
• Large-scale state employment can be ineffective: bureaucratic, stifles innovation

• The market economy cannot solve the employment problem. Both the ‘first’ and the ‘second’ economies depend on the creation of demand, which they cannot resolve.
• The market sector systematically reduces demand for the world’s most abundant resource – people – and increases demand for its scarcest – oil-based – energy. This is unsustainable.
• The global market systematically increases incomes at the top and reduces those at the bottom: income does not trickle down.
• Therefore poverty is systemic. Democracy and global peace are inevitable casualties.
• The service sector is starved of essential resources to employ personnel who would create and maintain the human resources needed for society as a whole and specifically for the market sector.

Ways to transfer resources – the surplus – from the market to the service sector in order to:
• Productivise unemployed people.
• Restore demand for the products of the market sector.
• Create the human capital needed for effective employment in the market sector.
• Begin to reduce our dependence on oil-based energy by reducing dependence on a sector that needs perpetual growth.
• Handle deadly epidemics that threaten public health and prosperity.

Ways to employ people creatively in the service sector to avoid:
• Bloated employers.
• Lack of democratic accountability.
• Loss of creativity.

1.TRANSFERRING RESOURCES FROM MARKET TO SERVICE SECTOR:
How do we do that now?
• Conventional, bureaucrat-heavy form-dependent taxation: personal, corporate and VAT. Annually determined by Treasury Minister. Resented, burdensome, especially for small business. Democratic pressure constantly to reduce it.
• Private donors acting charitably. Outside the democratic process. New ideas • Tobin and other transaction taxes: steady stream to Treasury; based on transaction so much larger pool; progressive; no forms or bureaucracy.
• Government-created new money: restores to the citizenry, via government, the value derived from seigniorage function of money creation; reduces debt.
• Use the tax system to privilege benign activity and to discourage destructive activity. Internalises the full cost of production: user pays for all effects of consumption; creates steady reduction in use of nonrenewable resources; encourages reduced human footprint.
• Direct investment by the financial sector in public infrastructure; putting national savings to use in building for future; reduce bond market speculation, and property bubbles.

2.WAYS TO EMPLOY PEOPLE CREATIVELY IN THE SERVICE SECTOR
How do we do that now?
• Government service in large public institutions or parastatals; impersonal and cumbersome, lacking incentives for innovation; unresponsive to public need, tends to crush innovation.
• Electorate has sense of remoteness; no local accountability. New ideas
• Mutual entities with local remits: institutions become mutual societies in which local people have democratic stake.
• Coalitions for management of NGOs, local government and private sector.
• Subsidiarity principle: service should be as close as possible to the beneficiaries.

Report compiled by Margaret Legum (Chairperson of the SANE Board of Trustees) with input from VanessaWitbooi-Johnstone (Director).