Property Rights on the chopping block?

Yarik Turianskyi and Steven Gruzd write on the debate around EWC from a philosophical and continental standpoint

As debate in South Africa swirls around land restitution and possibly amending the Constitution to permit land expropriation without compensation, it is useful to examine the early philosophical roots of land ownership property rights. And is South Africa in step with Africa on this subject?

An early idea on land ownership came from 17th Century English political philosopher John Locke. His work refers to the ‘state of nature’ when nothing was owned by anyone. Locke argues that, by mixing one’s labour with the land by cultivating it, an individual makes it his or her own. Locke’s logic is that both the produce and the land thus become the labourer’s property. There are, however, important caveats: ‘Anyone can through his labour come to own as much as he can use in a beneficial way before it spoils; anything beyond this is more than his share and belongs to others… Nature did well in setting limits to private property through limits to how much men can work and limits to how much they need.’ Locke nonetheless recognises that the advent of money made accumulation of ‘larger possessions’ (i.e. more than one person needs) possible through selling excess produce.

Being able to own more than one’s fair share formed the basis of the Marxist critique of Locke’s work. Ownership of the means of production, which includes land, implies that others can work the land, mixing it with their labour, while owners pay them a wage in return. Marxists argue that capitalist work contracts are incompatible with Locke’s labour-mixing theory to justify property ownership. Marxists also contend that it is unfair on a person with landless ancestors who were thus not able to pass land down to their descendants. This became a historical injustice. The person wants to work on land and mix it with her labour, to come to own the land and its produce, but, today there is little unowned land left.

Locke’s contemporary, Thomas Hobbes, famously described life in the state of nature ‘as solitary, poor, nasty, brutish and short’. Given the competition for limited resources and the instinct for self-preservation, rational individuals would give up some rights (such as the right to use violence against each other) to an authority (government), which would enforce a ‘social contract’ by implementing common laws and protecting its citizens. Several political philosophers also argued that it is a government’s duty to protect the property of its citizens. This idea of a ‘social contract’ remains relevant. Citizens pay taxes and accept the authority of a state. In return, the state protects them from violence, safeguards their property, settles disputes and provides social goods, such as roads, hospitals and education.

The motion to expropriate land without compensation, adopted by South Africa’s National Assembly on 27 February, may pave the way to amending Section 25 of the country’s Constitution. This states that ‘no one may be deprived of property except in terms of law of general application, and no law may permit arbitrary deprivation of property’. It is widely accepted that the country’s previous efforts have failed in addressing past injustices. However, is land expropriation without compensation the correct way to do that?

Much has been said about a similar policy in South Africa’s neighbour, Zimbabwe. Many critics blamed it for the collapse of agriculture, which saw Zimbabwe decline from the region’s breadbasket to a food importer. The country’s new president, Emmerson Mnangagwa, admitted that the land seized from the country’s white farmers will not be returned. But he is also attempting to modernise the country’s land policies and make them more inclusive, through enabling white farmers to take out 99-year land leases. South Africa seems to want to avoid the mistakes of its northern neighbour. President Cyril Ramaphosa has stated that land reform needs to be handled with care, and in a way that will not disrupt agricultural outputs, food security or the economy.

The odds of achieving this are slim. Erosion of property rights opens up a Pandora’s Box. What is to prevent the government from subsequently expropriating businesses or houses, particularly given rhetoric around nationalisation? Protection of property rights provides stimulus for individuals to contribute to the economy, through investment and innovation. Their erosion disincentivises businesses from investing in land, human capital and infrastructure. In the globalised modern economy, sometimes business chooses to move to other countries where property rights are enforced. Indeed, countries like Malawi, Mozambique and Zambia benefited from the ‘know-how’ of Zimbabwe’s farmers who left in search of greener pastures.

How does South Africa rank against its continental counterparts in terms of property rights?

The renowned Ibrahim Index of African Governance (IIAG) currently ranks South Africa number one in Africa in terms of property rights, with a score of 85.4 (out of 100). The International Property Rights Index (IPRI), produced by the Property Rights Alliance, also ranked South Africa first on the continent and 26th (out of 127) worldwide, with an overall score of 7 (out of 10). At present, property rights add greatly to South Africa’s competitiveness as an investment destination. They are a strength.

Should radical land expropriation policies be instituted, South Africa will be unlikely to hold pole position in either index. How can the very real injustices of the past be addressed without breaking the ‘social contract’ and scaring off investors?

But in seeking to roll back property rights, South Africa is at odds with trends in Africa. Mozambique, for instance, grants leases to land for periods of 50 to 100 years. These do not establish a particularly robust system of property rights, but they represent important progress on the command economy of the country’s past, creating the beginnings of a land market and providing security to investors.

Elsewhere, schemes such as Ethiopia’s land certification system or the customary landholding certificates in parts of Zambia, have attempted to provide users with some security. The important consideration here is less that formal, freehold title does not at present hold sway, but that they are moving towards greater property protections. The IIAG ranks Zambia at number 14 in Africa, followed by Mozambique at 31st and Ethiopia at 35th. The IPRI ranking differs somewhat, with Zambia at 9th, Ethiopia at 13th and Mozambique in 16th position.

While proponents of the contentious land reform proposals would argue that they want land and not a high rank in indices, a drop in these would undoubtedly affect the country’s already meagre economic growth. A degradation of property rights would remove a singular attraction for investors. The security of an investment is, after all, of central importance to all global investors – whether they are headquartered in Seattle, Shanghai or Stockholm.

Concerns about whether this might happen are compounded by a lack of clarity about how exactly land will be expropriated in the event of this becoming state policy. In spite of assurances by President Ramaphosa, this fear will remain, fuelled by rhetoric from the Economic Freedom Fighters, who wish to see nationalisation of all land in South Africa. The ANC may want to choose a more moderate and restrained approach, but it has itself upped the temperature on this issue and will in any event be under constant pressure from the EFF, especially ahead of the country’s 2019 national elections.

One possible option would be for farm workers receiving not just wages for mixing their labour with someone else’s land, but shares to enable them to fully benefit from profits generated by their hands. This would enable a gradual transfer of land on the basis of mutually beneficial trade and cooperation, rather than through forced expropriation without compensation by the state. It would also mean that the beneficiaries of this transfer would be in possession of property of their own: real assets they can invest in, profit from, and have pride in owning. Whether this will be on the table as a workable solution remains to be seen.

Yarik Turianskyi and Steven Gruzd are respectively the deputy head and head of the African Governance and Diplomacy Programme at the South African Institute of International Affairs