Qualities of a Developmental Elite

Written by Siyaduma Biniza

1

The concern of international development tends to be focused on the role of
institutions such as the state or the market. Rarely, does this concern the role of
civil society, elites and middle classes in development. However, there is a
discourse on political leadership which examines the sources of political legitimacy
concepts of power, authority and legitimacy. This sets the state for an engagement
of other actors beyond the two main institutional actors. The idea is that different
forms of authority exercise power in different ways which result in different forms
of legitimacy. But in this essay, I take this a little further but considering the
question of what kind of qualities required of elites to promote development?
I argue that kleptocratic and authoritarian elites are inimical to development.
These qualities are what lead to the pitting of nationalist interests against private
interests. Moreover, these qualities lead to opting out of elites from the nationalist
developmental agenda and holding government accountable. In addition elites
should not be incorporated into a system of structural imperialism which operates
through the alignment of private interests in elites from developing and developed
countries, whilst pitting elite against those of the masses and nationalist
development. Therefore, grounded in the developmental state theory, I argue that
the elites should be strong, insulated from dominant private interests, able to
discipline dominant private interest in favour of nationalist development. And in
the context of South Africa, and perhaps other post-colonial countries, the elites
should restrict behaviours that are inimical to development such as shareholder
value pursuit; and instead the elites should promote the group of an industrial
capitalist elite in order to create jobs, reduce inequality and overcome exclusion
of certain segments of society from the development process and its benefits.

1
Corporate Strategy and Industrial Development Research Programme, University of the
Witwatersrand, Johannesburg, South Africa and masters fellow at the Public Affairs
Research Institute and Economic Research South Africa.


siyadumab@pari.org.za | siyaduma.biniza@students.wits.ac.za Scribd | Linkedin
Firstly, I will follow the tradition of international development in that I will
understand development as being primarily achieved through the markets with
the state as the primary driver or deterrent to the efficient functioning of markets
in order to promote development (Todaro & Smith, 2003). In other words, I
understand the state as having a deterministic role in development. Hence, in the
context of market failure the state is seen as the primary institution that can
ensure the recovery of markets (Stiglitz, 2002); or a under kleptocratic authority
the state is understood as being inimical to development. This raises a few
questions. What is development? What is the market? What is the role of the
state in development? And what is the state?
To begin it is important to note something that has dominated the international
development literature. Firstly the separate matters of development and
economic growth is often conflated. Development, which relates to attainment of
human potential, is conflated with economic growth which relates to productivity
growth and accumulation (Herring, 1999). So the notion of development, which is
much broader than economic reality and includes other social aspects of human
life, has been conflated with the notion of economic growth which is measurable
in terms of gross national output and growth. Thus it is no surprise that in many
cases what we consider as development is measured according to economic
indicators due to this conflation. In deed some schools of thought understand the
separateness of economic growth and development, like the structural economics
school (Hunt, 1989). Nonetheless this conflation is a persistent feature of the
development discourse; and dealing with this conflation falls outside the scope of
this paper. But it is important to note before proceeding with the discussion of
what qualities an elite should have for development; and it worth noting this in
order to begin theorising about development more broadly.
The next question is about the concept of the market. The markets are used as a
black box theory of economic markets where transactions occur. I say its a black
box theory because the liberal discourse on development often treats markets as
though they are homogenous (Fine, 1999). Even when the heterogeneity of markets
is acknowledge, as is the case with information theoretical economists such as
Stiglitz (2002), there still remains an implicit assumption about the homogeneity of
domestic markets more. This means that markets are seen as unitary even though,
reality they are a complexity of unequal interactions between and amongst firms,
states and individuals in economic exchange. Nevertheless an intuitive
understanding of markets is that they are the sphere of economics. Now if we
understand the conflated understanding of development one can understand why
the international development discourse emphasises the role of the state and
markets. So what is the role of the state?
This is highly contentious question. The development of the discourse on the
states role in development can be summarised into four eras, namely: the pro-
state interventionism era in the 1950s and 1960s, the Washington Consensus era
which was dominated by a preference of market-orientated policies in the early
1980s and 1990s, the re-emergence of the state era which sought to introduce
effective state intervention in the mid-1990s, and the developmental state era
post-1997 (Fritz & Menocal, 2006). This shows the changing perception of the role
of the state and the gradual move from anti-interventionism towards effective
interventionism. Therefore, the discourse on the states role in development has
been dominated by two approaches which either emphasise the primacy of
economics or political economy as a determinant of development. But what is the
state?
A common view of the state is restricted to government. Therefore, in theorising
about development, often what we conceive as the state consists of the machinery
government; for instance the judiciary, the bureaucracy and parliament. However,
I do not conceive of the state of consisting of just government. Instead, I conceive
of the state as being broader than just government. In fact my understanding of
the state is very similar to that of Antonio Gramsci. That means that the state is
the nexus of power in society and this includes both government and civil society
(Gramsci, 2006). Therefore, my idea of state power is based on a dialectical
relationship between civil society and political society (Gramsci, 2006). Civil
society is the place of ideology, socialisation, and hegemony because civil society
is also an environment of inequality despite the liberal view that civilians are all
equal; and political society is the state institutions and machinery of government
(Gramsci, 2006). Practically, this is observable in the separation of powers
between the parliament which is closer to civil society and the judiciary which is
between parliament and government (Gramsci, 2006).
I take civil society to include what has been characterised as capital or
business, i.e. corporations that are owned by individuals who are part of civil
society. So as mentioned, the state is the nexus of power, which can also be
understood as the dominant forces that result from dialectical relationship
between civil society and political society. But of course the divide between civil
society and political society is not very distinct because some individuals may
straddle across civil and political society. For example, a firms decision to cut
wages could result in collective action by the workers organised through a trade
union to resist this wage-cut by influencing legislation. In this case the workers are
part of both civil and political society.
This conception of the state is consistent with countervailing arguments that the
organisational power of the government hinders us from actually discovering the
state by limiting understanding political practice (Abrams, 1988). In other words,
the state is hidden in a way which makes the common view of government being
the state problematic. However, through my conception of the state a more easily
observable theoretical object of the elite is more useful. Certainly leadership has
an important place in society and I take leadership and ownership to be
synonymous with elite. Hence leaders in political society are part of the political
elite.
However, it might be objected that due to various class interests and due to
phallocentric institutional biases (Beall, 2005; Goetz, 2006), in some cases the
leadership is not the elite. So there could be a case of captured government
authority that means the political leadership is not necessarily the political elite.
On the other hand, it may be argued that the exclusionary nature of civil society
means that use alternative forms of accessing or changing the state than those
espoused as characterising the civil society or formal governance (Chatterjee,
2011). This is not a problem since my understanding is that state power is the
result of a dialectical relationship between civil society and political society and
thus elite power is the outcome of a dialectical relationship between civil and
political leadership. Moreover, since there is a civil and political leadership, state
power may result in a relationship that favours civil leadership in some instance.
Hence, either way leadership equates to the elite. The way I conceptualise the
state allows for this and also allows for the extension of the Weberian political
leadership framework to civil leadership.
Civil society consists of a set of values that need to be commonly adhered to in
order to gain legitimacy in social formations such as spouses, friends, families,
communities and sometimes nations. These values are analogous to power which is
exercised by the authority in different form in relation to various forms of
legitimacy. For example, traditional civil legitimacy can be obtained through
adherence to values that are commonly held as a form of social norm such as non-
racialism or respect for ones elders. Similarly, charismatic civil legitimacy can be
obtained through adherence to values that come from ones character such as a
courteousy or courage. And lastly, legal-rational civil legitimacy can be obtained
through adherence to values associated with socially agreed upon statute such as
freedom of speech or freedom of religion. Of course, these values are very specific
to the social formation in cases but in some cases values are often commonly held
across social groupings, such as love for family which could extend between
spouses, parent and child or even siblings. Nevertheless, civil leadership is very
context specific.
The theorisation of the state I have used allows for this. The common government-
market dichotomy does not allow for hence limited analysis of political leadership.
This overlooks the fact that civil society is also integral to development which
making the concept of civil leadership important when theorising about the
qualities required of elites for development. In addition, society is made of
political and civil elites which means civil society also has a concentration of
power and typically economic power which far exceeds that of the government in
many cases (Crotty, et al., 1998; Burke & Epstein, 2001). The predominance of
neoliberalism can be understood as proof of this. Although the development
discourse may be said to consider the significant part of the civil society in the
form of the market in the government-market dichotomy, it does not deal with
civil society adequately because it takes a black box approach to the market.
Thus, the development discourse is unable to appreciate the nuanced experiences
of say industrial capitalist as opposed to finance capitalists which contemporary
experience of things like financialisation would be adequate proof of the very
different experiences felt by each of these types of capitalists (Hudson, 1998). This
further bolsters the importance of contextual factors in determining the ideal type
of civil leadership and the values people adhere to. To return to the question of
what qualities are required of elites I will confine myself to generalising about the
South African case, which can be generalised into a case for non-industrialised
post-colonial countries with limitations.
Theoretically, my analysis and argumentation for what qualities are required of
elites for development is grounded in the developmental state theory. Let us start
with the qualities of elites that are inimical to development. Its been argued that
a major challenge of development, legitimacy and nationalism in post-colonial
Africa are the kleptocratic and authoritarian regimes in the hands of leaders with
palatial lifestyles and disdain for the poor majorities (Clapham, 1985; Fanon, 1963;
Rustow, 1967). I would like to differentiate between this view of the political
elites and the common perception of corruption or rent-seeking behaviour of
elites. Rent-seeking is not necessarily inimical development, as Mushtaq Khan
(2006) has shown through his work on governance reforms in developing countries.
Moreover, some governments like that of Indonesia have been able to fund
development projects through clandestine means of monopolising rent-seeking in
the state; making them able to control rent-seeking in the economy in a way that
was consistent with the developmental agenda (MacIntyre, 2000). This is an
important consideration of development state theory, which argues that a strong
bureacracy is important for development.
Therefore, the issue of kleptocracy and authoritarian regimes show qualities of the
political leadership which are inimical to development as opposed (Clapham, 1985)
to rent-seeking which is not necessarily inimical to rent-seeking as long as the
state can discipline private interests in the interest of development (Khan, 2006).
In other words the political elite should consist of a strong and insulated economic
bureaucracy that is able to consolidate private and public interests for
development purposes (MacIntyre, 2000). This is important since elites in post-
colonial South Africa and other African countries have been criticised for being
only interested in economic rents as opposed to development and economic
transformation (Fanon, 1963; Cargill, 2010). But this need not be inimical to
development if the political elite consists of a strong and insulated bureacracy that
can control private interest in favour of development. This is the core argument of
the developmental state theory which argues for a set of characteristics necessary
for post-colonial development.
These characteristics include: a strong politically-willed and technocratic political
elite that can intervene in the market and co-ordinate private economic interests
in favour of national development goals, a civil society that can be subjugated and
a technocratic bureaucracy that can design and implement policies successfully
(Gainsborough, 2009). This requires a certain level of state autonomy from the
dominant private economic interests of civil society. But the political elite should
not just be autonomous agents of development insulated from the private sector
and civil society. Instead, the political elite needs to be embedded to harness a
mutually beneficial relation between private and public sectors to ensure
development (Meyns & Musamba, 2010: 13). The idea of embedded autonomy
asserts the necessity of interconnectedness between the political elites and civil
elites to ensure a two-way flow of ideas and learning that benefits both the state
and civil society through the provision of public goods. Moreover, the relationship
between the political elite and civil elite should be such that the state can insulate
its nationalist interests from being veered by the dominant private economic
interests of elites; whilst allowing the state to consolidate both public and private
interests in pursuit of development (Meyns & Musamba, 2010).
But it is vital to note that these notions are theoretical and ideal with states
resembling them to a certain degree (Herring, 1999). Therefore, in accordance
with the foregone discussion, the political elite should consist of strong and
insulated technocratic bureaucracy, be able to consolidate private economic
interests for the purpose of nationalist development and economic growth.
Moreover the political elite should operate with embedded autonomy such that
both national and private interests are catered for in a mutually-beneficial way
which requires co-operation and co-ordination between the political and civil
elites. This means that the issue of civil elites being able to opt out of publicly
provided goods needs to be avoided.
Elites are often criticised for opting out when the nationalist development projects
fails to offer adequate public provisions. For example, elites often utilise private
healthcare, education, transport etc. in order to overcome failures of the state to
adequately provide these services publicly. This undermines the notion of the
middle-class holding government accountable (Easterly, 2001). But this is not an
issue of affordability which determines ones ability to opt, instead this is an issue
undermining the notion of elites demanding adequate public goods from the state
and holding the state accountability. Therefore, this goes against the idea that
development requires co-ordination and co-operation between political and civil
elites in order to achieve nationalist development objectives such as economic
growth, creating jobs and reducing inequality. Without co-ordination between civil
and political elites, these objectives will not be met and instead a situation of
stagnant growth may result due to insufficient investment, or economic growth
may result without concomitant growth in jobs available, or inequality may affect
aggregate demand this reinforcing the challenges associated with slow growth.
The South African economy is challenged by high unemployment and inequality
(National Planning Commission, 2011). The South African economy has been
criticised for lacking economic linkages between its sectors due to something
called the Mineral Energy Complex (MEC). The MEC has prohibited the
development of other industries unrelated to energy and minerals extraction (Fine
& Rustomjee, 1996); this has had a lasting impact and in more recent years the
economy has been caught in a prolonged era of low growth, and growth without
job creation where there has been remarkable growth leading to
deindustrialisation and unemployment (Mohamed, 2011). In sum South Africa faces
some persistent and structural economic challenges which have locked the country
in a vicious cycle of low employment growth and the worst socioeconomic
inequality globally. Therefore creating jobs, promoting industrialisation and
reducing inequality are explicit development needs in the South African context.
The state needs to incentivise behavioural change on the part of some of the civil
elite, especially the capitalist class of civil elite. This is because behavioural
patterns such as shareholder value pursuit have an inimical impact on
development. Shareholder value pursuit is the result of the shareholder
revolution which sought to transform the business focus of managers towards
short-term investment management in order to increase dividend pay-outs to
shareholders (Ashman, et al., 2011). This has had negative impact on long-term
investments which have been replaced with short-term investment of pension
funds which have since become the biggest institutional investments. More
importantly though this shareholder revolution has resulted in declining capital
accumulation, in adequate real investment, increased speculative investment in
financial markets and job losses (Ashman, et al., 2011; McKenzie & Pons-Vignon,
2012). These are some of the characteristics of what has become known as
financialisation which has its roots in shareholder value pursuit.
This is inimical to development. Therefore the pressure on managers was not just
to ensure profits, but to ensure profits that were high enough to meet return and
dividend demands by shareholders and pay out to patrons of the pension fund. So
firms ended up downsizing and selling off all non-core operations (Satgar, 2012;
Edwards & Behar, 2006). Therefore, civil elites need to be reoriented to align
private economic interests towards real capital investment and industrial growth
with the end goal of creating jobs and reducing inequality.
The state needs to proactive grow the industrial class and establish a black
capitalist class of elites. This approach needs to be taken into account in policy
incentives and within the regulatory for corporate governance. Broad-Based Black
Economic Empowerment needs to be revisited in order to transform the current
non-capitalist class of civil elites such as the emergent black middle class into an
industrious capitalist class that invests in improving labour productivity and create
jobs (Cargill, 2010). On the other hand, through civil participation the civil elite
should pressurise the capitalist class of civil elites to take into account the interest
of marginalised and previously disadvantaged segments of civil society such as
black women and children.
Marginalised and previously disadvantaged segments of civil society need to have
their interests accounted for by the state since this segment of the population
have been historically, and continue to be, exploited and excluded from
development and its benefits. For instance, because of the MEC, industrial
development of South Africa has become biased against other labour-intensive
economic sectors. And the development of mining and energy were not based on
the efficient use of labour or industrial efficiency, instead the development of
mining and energy was based on the states ability to secure cheap labour through
its system of racist policies that allowed institutionalisation of cheap migrant
labour to support mining; meanwhile energy was a beneficiary of state support
through subsidies as well (Bonner, et al., 1993; Wolpe, 1972). Its important to
understand that the bias here is institutional and economic. By institutional I mean
the state has distributed power in favour of certain segments of civil society. And,
partly as a result of this, the sectoral bias has throttled the development of skills
and learning which are integrally important for industrialisation (Amsden, 2001)
and the establishment of comparative advantage. This needs to be taken into
account in constructing policies industrialisation in South Africa.
In other words, the state should address South Africas sectorial bias in through
strong industrial policy to improve productive efficiency, balance sectoral
development, and promote labour-intensive production in order to create jobs and
economic linkages within the economy without exclusion of certain sectors and
population groups. Industrialisation is important because, according to the
structural approaches to economics, industrialisation is the only way post-colonial
states can develop and break away from their dependence on former colonial
states. Industrialisation can be a process that leads to economic freedom for post-
colonial countries because many of these countries are seen as underdeveloped
and structurally dependent on industrialised countries since they not industrialised
(Ake, 1981; Hunt, 1989). That means that industrial is associated with growth
which is an integral part of development (Todaro & Smith, 2003).
However, the process of development through industrialisation can be undermined
by the different interests between the elite and the masses within the country and
alignment of interest between the developing countrys elite and the elite of
developed countries (Galtung, 1971). The impact of this is that developing
countries tend to be vertically integrated into a system of structural imperialism
do to the inequalities within countries and between countries (Galtung, 1971). This
is overlooked in the context of developing country elites with common interest to
those of developed country elites because actions aligned with the private interest
of developing country elites are lauded and encouraged because they are aligned
with the interests of developed country elites even though they are inimical to the
nationalist development project and the masses within the developing country.
Therefore, elite behaviour needs to be religiously tied the domestic context they
find themselves in as opposed to their private economic interest. Its is important
to reiterate that this is an idealised quality and in fact elites may not live up to
this in reality however, the point I am raising here is the importance of contextual
factors in determining the qualities required of elites for development and the
importance of restricting the pursuit of private interests by the elite when it is
inimical to development.














Works Cited
Abrams, P., 1988. Notes on the Difficulty of Studying the State. Journal of Historical
Sociology, 1(1), pp. 58-89.
Ake, C., 1981. Chapter 5: The Post-Colonial Economy. In: A Political Economy of Africa.
England: Longman, pp. 88-132.
Amsden, A., 2001. Industrialising Late. In: A. Amsden, ed. The Rise of "The Rest":
Challenges to the West from Late-Industrializing Economies. New York: Oxford University
Press, pp. 1-31.
Ashman, S., Fine, B. & Newman, S., 2011. The Crisis in South Africa: Neoliberalism,
Financialisation and Uneven and Combined Development. Socialist Register, Volume 47,
pp. 174-195.
Beall, J., 2005. Decentralizing Government and Decentering Gender: Lessons from Local
Government Reform in South Africa. Politics & Society, 33(2), pp. 253-276.
Bonner, P., Delius, P. & Posel, D., 1993. The Shaping of Apartheid: Contradiction,
Continuity and Popular Struggle. In: P. Bonner, P. Delius & D. Posel, eds. Apartheid's
Genesis: 1935-1962. Johannesburg: Witswatersrand University Press, pp. 1-41.
Burke, J. & Epstein, G., 2001. Threat Effects and the Internationalization of Production,
Amherst: Political Economy Research Institute.
Cargill, J., 2010. Trick or Treat: Rethinking Black Economic Empowerment. Johannesburg:
Jacana Media.
Chatterjee, P., 2011. The Debate over Political Society. In: A. Gudavarthy, ed. Re-Framing
Democracy and Agency in India: Interrogating Political Society. London: Anthem Press, pp.
305-322.
Clapham, C., 1985. The Third World State. In: Third World Politics: An Introduction.
s.l.:Croom Helm Kent.
Crotty, J., Epstein, G. & Kelly, P., 1998. Multinational Corporations in the Neo-liberal
Regime. In: D. Baker, G. Epstein & R. Pollin, eds. Globalization and Progressive Economic
Policy. Cambridge: Cambridge University Press, pp. 117-142.
Easterly, W., 2001. The Middle Class Consensus and Economic Development. Journal of
Economic Growth, Volume 6, pp. 317-335.
Edwards, L. & Behar, A., 2006. Trade Liberalisation and Labour Demand Within South
African Manufacturing Firms. Studies in Economics and Econometrics, 30(2), pp. 127-146.
Fanon, F., 1963. The Pitfalls of National Consciousness. In: The Wretched of the Earth.
Middlesex: Penguin.
Fine, B., 1999. Competition and Market Structure Reconsidered. Metroeconomica, 50(2),
pp. 194-218.
Fine, B. & Rustomjee, Z., 1996. The Political Economy of South Africa: From Minerals-
Energy Complex to Industrialization. Boulder: Westview Press.
Fritz, V. & Menocal, A. R., 2006. (Re)building Developmental States: From Theory to
Practice, London: Overseas Development Institute.
Gainsborough, M., 2009. The (Neglected) Statist Bias and the Developmental State: the
case of Singapore and Vietnam. Third World Quarterly, 30(7), pp. 1317-1328.
Galtung, J., 1971. A Structural Theory of Imperialism. Journal of Peace Research, 8(2), pp.
81-117.
Goetz, A. M., 2006. Institutionalising Womens Interests and Accountability to Women in
Development (Introduction). IDS Bulletin, 47(4), pp. 71-81.
Gramsci, A., 2006. State and Civil Society. In: A. Sharma & A. Gupta, eds. The
Anthropology of the State: A Reader. Oxford: Blackwell, pp. 71-85.
Herring, R. J., 1999. Embedded Particularism: India's Failed Developmental State. In: M.
Woo-Cummings, ed. The Developmental State. Ithaca and London: Cornell University
Press, pp. 306-334.
Hudson, M., 1998. Financial Capitalism v. Industrial Capitalism. Oslo, The Other Canon
Conference on Production Capitalism vs. Financial Capitalism.
Hunt, D., 1989. Chapter 5: The Structuralist Paradigm. In: Economic Theories of
Development: An Analysis of Competing Paradigms. London: Harvest Wheatsheaf, pp. 121-
161.
Khan, M. H., 2006. Governance and Anti-Corruption Reforms in Developing Countries:
Policies, Evidence and Ways Forward, New York and Geneva: UNCTAD and Inter-
Governmental Group of 24.
MacIntyre, A., 2000. Funny Money: Fiscal Policy, Rent-seeking and Economic Performance
in Indonesia. In: M. H. Khan & J. K. Sundaram, eds. Rents, Rent-seeking and Economic
Development: Theory and Evidence in Asia. Cambridge: Cambridge University Press, pp.
248-273.
McKenzie, R. & Pons-Vignon, N., 2012. Volatile Capital Flows and a Route to Financial
Crisis in South Africa, Johannesburg: Corporate Strategy and Industrial Development.
Meyns, P. & Musamba, C., 2010. Introduction: Recent Debates on the Developmental State
in Africa, Duisburg: University of DuisburgEssen.
Mohamed, S., 2011. Negative Trends in the South African Economy: How Should These be
Overcome?. In: M. Mbeki, ed. Advocates for Change: How to Overcome Africa's Challenges.
Johannesburg, South Africa: Pan Macmillan South Africa, pp. 15-36.
National Planning Commission, 2011. National Development Plan, Pretoria: Minstry of the
Presidency.
Rustow, D., 1967. Political leadership in New States. In: A World of Nations: Problems of
Political Modernization. s.l.:Croom Helm Kent.
Satgar, V., 2012. Beyond Marikana: The Post-Apartheid South African State. Africa
Spectrum, 47(2-3), pp. 33-62.
Stiglitz, J. E., 2002. Information and the Change in the Paradigm in Economics. The
American Economic Review, 92(3), pp. 460-501.
Todaro, M. P. & Smith, S. C. eds., 2003. Classic Theories of Development: A Comparative
Analysis. In: Economic Development. California: Addison Wesley, pp. 110-144.
Wolpe, H., 1972. Capitalism and Cheap Labour Power in South Africa: From Segregation to
Apartheid. Economy and Society, 1(4), pp. 425-456.