Free Market Foundation founded on moral economic principles

The Free Market Foundation (FMF) has for forty-two years been working for freedom and prosperity for all. All these years later the FMF continues to argue for government policies that will benefit all South Africans. The FMF is non-partisan and its major focus is on putting forward policies that will improve the lives of all South Africans, particularly the poorest and most vulnerable members of the population.

Civil society organisations have been very active during the past year. Increasingly, they are demanding that government adhere to the principles set out in the constitution and adopt policies that will lead to peaceful co-existence. Given the happenings in the country, more people are coming to understand the moral philosophical and economic underpinnings of the FMF’s work. Perhaps this understanding is not as widespread as we would like it to be but I do believe it is growing. Founded in 1975 to oppose apartheid and work for freedom, the guiding philosophical principles adopted by the FMF in 1975 are:

1. All people have the right to life and the right to conduct it as they see fit, provided they do not impinge upon the similar rights of any person.
2. Amongst the most fundamental rights of all persons is the right to own and control property and the produce of their own efforts and to dispose of it as they see fit.
3. No person or group has the right to initiate violence or the threat of violence against any other person or group.
4. The only economic system consistent with the abovementioned fundamental rights is a market economy, in a free unfettered market in which all persons are at liberty to deal with their property and conduct their affairs according to their own individual needs and motives.
   

These guiding principles established the FMF as an opponent of apartheid or any other system of government that violated the sanctity of individual liberties. The apartheid system was characterised by authoritarian domination over the entire population. Black South Africans were compelled by force to live under full socialism (no rights in the conduct of their lives, constantly subjected to violence and the threat of violence, no right to own property in land, with black and white citizens told the lie that the system they were living under was “free enterprise”.

Under the circumstances it was understandable, as FMF director, Temba Nolutshungu, explained, “We wanted the opposite of what we had. If apartheid was free enterprise, then we, tragically, thought that socialism would be our saviour! We did not realise that we were living under authoritarian socialism, which was the cause of our grief!” Temba went on to warn that, “Freedom is indivisible, you cannot have freedom for some and not for others in the same country”. That is a truth that should be taken to heart by all South Africans.  

Unfortunately, fundamental rights continue to be abridged by legislation and regulations in our country today. It was possibly too much to hope that South Africa would transform in easy steps from authoritarianism to freedom. If we look around the world we find that it is in the freest economies that the poor are better off and not in countries in which the greatest forcible wealth transfers occur. Economic freedom is all about governments respecting the rights of the people. If their rights are respected, the people are free to utilise their talents to best advantage, are most productive, and consequently, earn higher incomes.

The issue of economic freedom receives the constant attention of the FMF because of its potential for bringing about high economic growth, increased incomes throughout the economy, and reduced unemployment and poverty. In the year 2000, South Africa, at 42^nd, was ranked in the top 30% of the world’s freest economies and looked set for high economic growth. Sadly, the economic policy options adopted since then have brought about a decline in our economic freedom ranking that has taken the country to 105^th and into the bottom 35% of the economic freedom rankings.

If we had kept going in the policy direction that made our country the 42^nd freest economy in the world, our GDP per capita would arguably have been at least 50 per cent greater than it is today. Returning to the 2000 policy formula would require that government significantly reduce its role in the economy, change its stance on property rights and foreign investment, improve policing and the integrity of the legal system, stop corruption, and reduce red tape.

The FMF’s Khaya Lam (My Home) Land Reform Project co-operates with municipal governments and with financial assistance from generous donors, to transfer fully tradable title to municipal rental properties to registered occupants, at no cost to the households. A major objective of the project is to demonstrate the benefits of property titling and to encourage municipalities and groups of people across the country to become involved in titling the homes of people who were denied ownership rights by the 1913 land act and still do not have titles to their properties.

To date the Khaya Lam project has, in total, presented 1,294 titles to deserving families and is in the process of transferring a further 3,409 and motivating for the transfer of another 2,000 in various areas of the country. The total amount donated to the project to date is R7.44 million, resulting in the transfer of property worth at least R470 million to low income families. Legislation adopted in 1991 gave ownership to an estimated five million families but they do not have title deeds to prove it. The Khaya Lam project, participating municipalities and generous donors, are working on rectifying the situation.

The FMF’s Health Policy Unit promotes private provision and funding of healthcare for those who can afford it and the utilisation of taxpayer resources by the State to provide high quality care for the poor. Government’s NHI plans aim to nationalise private healthcare provision and funding. The HPU proposes the opposite: to improve health care for everyone, including the poor, the best option will be to allow private healthcare services to grow as rapidly as possible with the end goal of serving the entire population, with government increasingly purchasing quality care for the poor from competing private providers.

The FMF’s Rule of Law Project, chaired by former Judge of the Supreme Court, Rex van Schalkwyk, is set to have a positive influence on the laws of South Africa. The fact that the rule of law is incorporated in the Founding Provisions of the constitution has been largely, or almost entirely, overlooked in the drafting of South Africa’s legislation and regulations. The Rule of Law Project seeks to correct that oversight. More than twenty pieces of legislation have already been found to contain provisions that conflict with the rule of law and are therefore unconstitutional. Many laws that contain constitutionally dubious provisions granting excessive regulatory powers to ministers and/or government officials are in need of rectification.

What is clear is that everyone will be better off with a thriving, well-functioning economy, which will be achieved only if the private sector of the economy (small and large business) is assured of an investment environment that is stable, certain, and conducive to long term planning. Most importantly, it will be achieved in an economic environment in which consumers get the best service and the best value for their money.

Author Ayanda Khumalo is acting chairman of the Free Market Foundation. This article may be republished without prior consent but with acknowledgement to the author. The views expressed in the article are the author’s and are not necessarily shared by the members of the Free Market Foundation.