The price of populism? – the rule of law, economic freedom & social progress

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Martin van Staden | Head of Policy | Free Market Foundation | mail me |


The results are in. The African National Congress has attained 40% of the vote, the Democratic Alliance (DA) 21%, uMkhonto we Sizwe (MK) 14%, and the Economic Freedom Fighters (EFF) 9%. It is clear that some of these parties enjoy too much support in the context of a country that claims to be a constitutional state that prioritises the rule of law and which requires massive foreign and domestic private investment.

Investment, and by implication economic growth, is impossible in the absence of the certainty and stability that the rule of law offers. Indeed, you will find no example of a thoroughly successful society anywhere in the world that does not rank highly in both measurements of economic freedom and the rule of law.

“…the rule of law as the legal institution that regulates or attempts to eliminate state arbitrariness.”

Measuring success 

The golden standards in both departments are the Economic Freedom of the World (EFW) annual report by the Fraser Institute, and the Rule of Law Index (RLI) by the World Justice Project. The 15 highest ranked countries in the RLI, meaning the countries that best respect the rule of law, are all in the first quartile of the EFW.

South Africa ranks 94th out of 165 in the EFW and 56th out of 142 in the RLI. In both cases, broadly in the middle of the pack.

A society can only experience growth and progress under circumstances where the rule of law and a dynamic market economy are maintained. I challenge anyone to find an example of a country that has decided to pursue (real, capitalist) freedom of enterprise and a strict adherence to the rule of law, which has not been successful.

No matter how loudly the radical left in South Africa proclaims the ANC’s ‘great betrayal’ of adopting so-called ‘neoliberal’ policies over the three decades of its rule, the data simply does not reflect that. The ANC has been a committed interventionist party that does not tolerate a free private sector.

Neither of the two other notable radical left parties, the (terribly misnamed) EFF and MK, would do any better.

Defining the rule of law 

Leaving economic freedom aside, South Africa has always fared relatively well on the rule of law charts compared to the rest of the African continent. However, unfortunately like most of the rest of the world, South Africa’s rank is slipping. In the 2023 RLI, South Africa was beaten on the continent by (in ascending order) Botswana, Mauritius, Namibia, and, taking the top African spot, Rwanda.

At a recent gathering in Vaduz, Liechtenstein, where I presented my paper, ‘Rule of Law: The Universal Unwritten Constitution,’ I defined the rule of law as the legal institution that regulates or attempts to eliminate state arbitrariness.

To be practically useful, the RLI purposefully adopts a wider conception of the rule of law than this, by measuring a large number of rule of law-related factors. However, it has adopted four ‘universal principles’ of the rule of law which all, in some form or another, are explored in my paper.

They are:

  • Public and private accountability to law;
  • Clear, publicised, stable, and evenly applied law;
  • Accessible, fair, and efficient processes through which the law is adopted, enforced, and adjudicated; and
  • Impartial, independent, and competent administration of justice.

The dangers of democracy

In large part, high degrees of economic freedom and the rule of law tend to coincide with democratic dispensations. But this does not mean democracy is not itself an unruly mechanism.

Venezuela is an excellent example. This South American country finds itself dead-last on both the Economic Freedom of the World and the Rule of Law Index. It does not get any worse for free enterprise or constitutionalism than Venezuela.

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