I am struck by the omnipresence of Jagdish Bhagwati’s empirical studies of immiserising growth in our approach to the just energy transition. This is present in its pure economic analysis but also in the evolution of immiserisation as conceived by Paul Shaffer of Trent University. Shaffer conceives of immiserising growth as “situations where economic growth fails to benefit, or harms, the poor”.
He labels this as failed inclusion or active exclusion. Both forms of harm exist in this paradigm of energy. Eskom remains front, back and centre of scandals that Shaffer describes as “mechanisms preventing growth from reducing poverty”. These, he observes, are “frequently tied to politics, political economy, the exercise of power and related forms of exclusion”.
My interest in Jagdish Bhagwati dates back to 1980 during my postgraduate studies at the University of Ghana in Legon. I was an ardent follower of Progress Publishers and on one of my weekly visits to the bookstore in Accra I discovered his 1958 book titled Immiserising Growth. The title was provocative and I was not disappointed. I used to visit the bookstore where I would immerse myself in volumes of Georgi Plekhanov, Karl Marx and Lenin in the main. But as a student of demography, D Valentey came in handy. These were not prescribed books, but they broadened horizons and consciousness. The prescribed literature mainly dealt with the mathematics and technical demography of population projections, imputations and interpolations.
SA is no expert in either technology or manufacturing of solar panels. But even if they are manufactured locally, a condition one of Baghwati’s immiserisation persists.
Bhagwati’s book took me straight to the political economy of Lesotho in relation to that of SA. I wondered whether Lesotho was steeped in immiserising growth. I was on study leave at the UN Regional Institute for Population Studies, courtesy of Lesotho’s ministry of labour where I worked. With the migratory labour system and the rich data, I had access to volumes of mineworkers.
According to Bhagwati the possibility of immiserising growth is increased if: the ratio of domestic production to imported goods is small; if the constant-utility demand-elasticity for imported goods, with respect to a change in the price of imported goods, is small; and if the elasticity in supply of imported goods when production shifts along the production-possibility curve in response to a change in the price of imported goods, is small.
All these conditions of immiserising growth arose in Lesotho but were worsened by the increase in its fortunes with the demise of Malawi miners who perished in a plane crash. Malawi decided to withdraw its labour, and their poison was a good meal for Lesotho as it would increase the numbers Lesotho sent. Then the Independence of Mozambique increased the openings of jobs for Lesotho and the Transkei, which were the main sending regions of labour to the mines. While Lesotho of the 1970s was different from one of 1800s, the emergence of the difference was progressing along a predetermined trajectory of Immiserising Growth. Lesotho was the bread basket in the 1800s and mid-1900s to the mining and urbanising communities in SA. But progressively with a set of tools of immiserisation Lesotho over 150 years ended as a country immersed in the immiserised growth trajectory, especially now with the added burden of closure of mines. The salariat proletariat at the mines bought goods that made them quite distinct and increasingly there was very little agricultural produce crossing from Lesotho to SA, the consequences of colonialism, apartheid and forced migratory labour system. All the three conditions of immiserising growth were met. While SA suffers its growth demons relative to the rest of the world, Lesotho is even in a more precarious position relative to SA in terms of the immiserising growth that unfolded over at least the past 150 years and counting. My work of 45 years ago is awoken in the light of the just energy transition blood rush to the head.
SA’s much talked about solar energy suffers the same three conditions Lesotho suffered relative to SA. SA is no expert in either technology or manufacturing of solar panels. These are wholly imported. But even if they are manufactured locally, a condition one of Baghwati’s immiserisation persists. The appetite of SA for imported goods relative to its low value raw mineral exports is not only lopsided in favour of imports, but SA remains a price taker relative to its trading partners after its huge deindustrialisation project. Three, obviously elasticity in supply of imported goods when production shifts along the production-possibility curve in response to a change in the price of imported goods remains typically small. With these conditions prevailing in SA and a low growth trajectory to-date, the immiserisation is not of growth but one that gnaws to the bone because the sinews were long gone. SA has difficult headwinds in its mal-advised economic policies.
Let me then delve into the failed inclusion and active exclusion of the poor. There is no just energy transition for the poor. First, only after Komati was closed did Eskom issue a tender to consider the affects of closure. So the thesis here is not how exclusion does harm but confirms active exclusion of the poor. They are first barred from accessing what they historically had in Komati, then they are asked how they feel and think about how their active exclusion will harm them.
We all agree that for benefit to accrue there must be growth. A corollary of this brutal step that the government took is that there is no growth, not only across the country but in the environment where the residents and employees of Komati and the surrounds eked a living. Furthermore, by their own admission, the government with all the just energy transition mantra only conceives of a rate of growth of 1.3% by 2026 and counting as reflected in the Treasury budget speech of 2023. There won’t be a magic wand that will generate any growth, let alone one that is shared. It cannot be shared based on the economic reasoning given by Baghwati’s thesis of Immiserising Growth. It will not be shared because the poor cannot afford the solar panels that are being imported. This is a drain on foreign exchange instead.
When the Indlulamithi Scenarios discuss what has gone wrong in the country, the citizens said loud and clear that it is electricity and unemployment. A just energy transition has crucified the country not only in an immiserising growth trajectory conceived by Bhagwati in his 1958 publication, but it fits the evolution conceived by Shaffer on the thesis of “situations where economic growth fails to benefit, or harms the poor”. The just energy transition marked by absence of energy especially for the poor who cannot afford the solar panels impugns on them a failed inclusion and an active exclusion.
Dr Pali Lehohla is the director of the Economic Modelling Academy, a Professor of Practice at the University of Johannesburg, a research associate at Oxford University, a board member of Institute for Economic Justice at Wits and a distinguished Alumni of the University of Ghana. He is the former statistician-general of SA.
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