South Africa should choose between freedom and equality

Economists have long debated whether the pursuit of equality undermines freedom.

Nobel laureates such as Milton Friedman and Friedrich Hayek argued that redistributive policies often weaken individual liberty by expanding state power.

In South Africa, inequality is placed at the centre of political discourse. President Cyril Ramaphosa and the African National Congress (ANC) describe it as a “scourge” that must be eradicated to build a fairer society.

The Democratic Alliance’s John Steenhuisen, also frames poverty and inequality as legacies of apartheid that require urgent redress.

Debates largely remain locked to apartheid’s legacy, arguing that they are undermining transformation and redress.

South Africa remains one of the most unequal societies in the world, according to the World Bank’s data. The top 10% of earners take home around 65% of total income, while the bottom 50% share less than 6%.

At the same time, unemployment hovers near 33%, among the highest globally.

Critics argue that an overemphasis on inequality risks diverting attention from structural challenges such as sluggish economic growth, weak governance, and chronic joblessness.

They note that inequality can be politically powerful, as it taps into widespread public frustration, but that it can also become a rhetorical smokescreen.

The danger is that inequality becomes a catch-all villain while the state avoids accountability for failing to deliver growth and employment.

Friedman, the American economist and 1976 Nobel laureate, argued that prioritising equality of outcome over individual freedom risks leaving societies with neither.

In his influential work Capitalism and Freedom (1962), Friedman warned that attempts to enforce equal outcomes require extensive government intervention in markets and personal choices, inevitably limiting individual liberty.

British economist and philosopher Hayek cautioned in The Road to Serfdom (1944) that efforts to engineer equality through central planning could erode personal freedoms and pave the way for authoritarianism.

“A claim for equality of material position can be met only by a government with totalitarian powers,” he wrote.

South Africa offers a contemporary case study in this tension. Successive governments have sought to reduce inequality, particularly along racial and gender lines, through policies such as Black Economic Empowerment (BEE) and the Employment Equity Act.

These laws require companies to diversify ownership and management structures, but are seen, in practice, to benefit a small handful of well-connected political elites.

It also sets targets for demographic representation in the workplace.

Supporters argue that such interventions are necessary to redress the deep structural inequalities left by apartheid.

Critics, however, contend that compliance with BEE and equity regulations often restricts businesses’ ability to hire or contract freely, raising costs and ultimately discouraging investment.

Growing an economy creates higher inequality

Economic growth and inequality often rise together, a pattern visible in several countries that transitioned from widespread poverty to prosperity.

China offers one of the most striking examples. Following sweeping market reforms in 1979, China experienced decades of rapid industrialisation and urbanisation.

Between 1990 and 2010, its GDP per capita surged from under $1,000 to more than $4,500, according to World Bank data.

At the same time, the country’s Gini coefficient, a standard measure of income inequality, climbed from 32 to 44, signalling a sharp widening in the gap between rich and poor.

Since 2010, the Gini index has dropped to around 38.2, reflecting targeted poverty-alleviation programmes and redistributive policies. Even so, inequality remains far higher than three decades ago.

South Korea followed a similar trajectory. Emerging from war, authoritarian rule, and entrenched poverty in the 1960s, the country embraced export-led industrialisation and democratic reforms.

By the 1990s, South Korea had become one of Asia’s most dynamic economies, with GDP per capita jumping from less than $100 in the early 1960s to over $10,000 by 1995.

But as prosperity spread, inequality also rose, with the Gini coefficient increasing during the high-growth years before stabilising more recently.

Economists argue this pattern is predictable. When nearly all citizens are poor, inequality levels appear low, not because wealth is evenly distributed, but because there is little wealth to distribute.

As economies grow, new industries, urban opportunities, and access to education create winners and laggards, leading to wider income gaps.

This evidence challenges the idea that reducing inequality should be the primary metric of progress in developing economies. The reality is that inequality is often a byproduct of growth.

The priority should be raising incomes across the board, once a country is significantly wealthier, policies to narrow inequality become more feasible and less damaging to growth.

For South Africa, which the World Bank ranks as the most unequal country globally, the lesson from China and South Korea may be sobering.