Natale Labia

Natale Labia writes on the economy and finance. Partner and chief economist of a global investment firm, he writes in his personal capacity. MBA from Università Bocconi. Supports Juventus. First published in the Daily Maverick 168 weekly newspaper. The phrase is most usually attributed to the Genevan mathematician and philosopher Jean-Jacques Rousseau, who wrote the eponymous 1762 text that is still standard reading for first year politics students. In it he outlined the basic contract – an agreement – between the state and individuals, that should exist for a state to be legitimate over the individual. For a state to be legitimate, individuals have to renounce certain freedoms to the authority of the state, in exchange for protection of the remaining rights of the individual and maintenance of order. Rousseau’s example of the rights to land ownership may sound particularly apposite. Land can be legitimately claimed if three conditions are present: if it is uninhabited, that the owner claims only what is needed for subsistence, and that ongoing labour and cultivation give the possession legitimately. One might therefore suggest that those who argue against land reform in South Africa should revisit their political philosophy. However, in a modern context, there are several more essential ways to apply the concept of the social contract in South Africa. First, there is a fundamentally economic element to it. To respect the rules and legitimacy of the state, the state should institute a framework in which all citizens have at least equal access to economic opportunity. Should that not exist, then what is the incentive for individuals to comply with the removal of economic rights as laid down by the state (being precluded from helping yourself to a TV without paying for it, for example)? It is clear that the social contract in South Africa has been fraying for years, maybe decades. A cursory glance at South Africa's economic statistics confirm it. Unemployment is up almost 10% in the past 10 years, but the basic numbers are even more shameful. There are more than 7 million unemployed South Africans, but also more than 3 million who are not working but also not even looking for a job as it is so clearly a futile task. One in six South Africans are therefore daily all too aware of the non-compliance of the state with its social contract. Furthermore, South Africa is the world's most unequal country, with a Gini coefficient of 63.0. The statistics beggar belief. According to the World Bank report of 2020, the richest 10% hold 71% of the wealth,