ANC Today

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Volume 4, No. 43, 29 October - 4 November 2004

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THIS WEEK:

* Letter from the President: Happy 40th birthday Zambia
* Approaches to Poverty Eradication and Economic Development III: The Truth &
the Asian Miracle
* Tribute to Dumisani Makhaye: A revolutionary, a communicator and one of two
real intellectuals

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LETTER FROM THE PRESIDENT

Happy 40th birthday Zambia

On 24 October, a few of us had the privilege to join the government and people
of Zambia as they celebrated the 40th anniversary of the independence of this
sister African country. We undertook this journey north of the Zambezi as a
labour of love.

During our days of struggle against the apartheid system, Zambia provided a
second home to many of our people. Throughout the long years of our struggle,
its citizens daily demonstrated their readiness to stand with us until freedom
was won. This principled position in favour of peace, democracy and non-racism
in our country, imposed many sacrifices on the Zambian people, including loss of
life and subversion of its economy.

Even before independence in 1964, the Zambian liberation movement, led by
Kenneth Kaunda, and originally constituted by the Northern Rhodesia African
National Congress, had acted in solidarity with our own African National
Congress. It received, protected and helped to transport to the then Tanganyika
of Julius Nyerere the very first combatants of Umkhonto we Sizwe, who left our
country from 1961 onwards, to train in Africa and elsewhere in the world as our
people's soldiers for liberation.

Subsequently, and for more than 20 years, Zambia hosted the external
headquarters of our movement, the ANC. It was from its capital city, Lusaka,
that in 1990 we flew back to our own country, in a Zambia Airways plane lent to
us by President Kaunda and his government, to begin the process of negotiations
and finally end the long years of exile and the even longer years of white
minority domination. Even as we left this second home to return to our native
land, we knew that the bonds of virtual kinship between us and the Zambian
people would never be broken.

When we spoke during the 40th anniversary festivities, we also conveyed profound
thanks to the Zambian people on behalf of the peoples of Mozambique, Zimbabwe,
Namibia and Angola. This was because Zambia had played a pivotal role in the
struggle for the liberation of these sister peoples and fellow combatants, as it
had done with regard to ours.

It was therefore very moving to see among the honoured guests of the President
of Zambia, Levy Mwanawasa, the first President of independent Zambia, and
outstanding African statesman and patriot, Dr Kenneth David Kaunda - KK - the
very first recipient of our esteemed Order of the Companions of O.R. Tambo, who
had educated his people to accept the struggle for the total liberation of
Africa as their own.

In his presence, surrounded by the happy celebratory mood so evident on the
faces of the Zambian people, we could not but wish that two of KK's comrades and
close friends, Julius Mwalimu Nyerere and Oliver Tambo, could have been among
the celebrants, mixing freely with the hero people of Zambia.

Two striking messages stood out among the sentiments the Zambian people
communicated about the meaning to them of their 40 years of freedom from
colonialism.

One of these was the repeated passionate reference to the gift of peace that
Zambia had enjoyed in its four decades of freedom, even as the then colonisers
and oppressors worked hard to impose the war on Zambia they were waging against
those they had colonised and subjected to apartheid domination.

Even those in their twenties, born long after their country gained its freedom,
gave thanks that free Zambia had been spared the pain of civil war and conflicts
generated by military dictatorship brought about by coups d' etat.

Those of the older generation who had fought for Zambia's independence also
spoke about the humiliation and indignity that colonial domination had imposed
on the Zambian people. They spoke of 40 years during which their people had
experienced a life free of the humiliation and indignity of racial superiority
and oppression, and of the immeasurable value that attaches to the recovery of
the dignity of the African masses.

Four decades of familiarity with the experience of domestic peace and human
dignity had not bred contempt for these extraordinary gifts! Time has not dulled
the sensitivity of the people of Zambia to the fundamental importance of the
objectives of peace and human dignity for themselves and for all Africans.

None of us, pampered guests of the Zambian government and people, could fail to
hear what these masses conveyed instinctively - that they are proudly Zambian
and African, regardless of the problems they continue to experience, of poverty
and underdevelopment.

Two of our white compatriots, Peter and Beverly Pickford, have just published an
outstanding book that affirms an almost unfathomable love for Africa and
celebrates the true and complex sense of humanness that the African humanity to
which they belong - integrated within its habitat -spontaneously, and without
reserve, bestows as a priceless gift to itself and all other human beings,
everywhere. The principal character in the book is the African soul.

The book is entitled 'Forever Africa: A Journey from the Cape of Good Hope to
Morocco'. In vivid photographs and moving words it tells of the year-long
overland journey the Pickfords took, travelling from the confluence of the
Indian and Atlantic Oceans at the southern tip of Africa, to the waters of the
Mediterranean Sea, where it washes the African coast at Tangiers in Morocco.

Early one morning, in the fading darkness before sunrise, Peter Pickford sat
alone next to a dying campfire along the Gomoti Channel within the Okavango
Delta, in northern Botswana, contemplating the inevitability of death and
therefore his ultimate and final separation from everything that defined his
being - Africa. He has written: "It would be well, I mused to myself, that when
your time is called, it should be a good time. A time like this. For each person
it would be different, their good time, but this was mine. I was alone, not
lonely, but where being alone makes the whole world, all of life, pivot around
your own senses. There is peace in it, and you must be silent and try not to
think too much, but rather to feel and let yourself drift in it. It makes me
happy, not to smile, but that gut happy contentment when for that while, you and
the earth and the water and the trees and the stillness are all bound in one.
Life in that moment is perfect."

If death came at the moment when you and the African earth and the water and the
trees and the stillness are all bound in one, it would not be death. It would be
an expression of the contentment that the life that would not die, even after
death, would be perfect, because to be African is to understand that even after
death, the African soul would be guaranteed a place where it and the earth and
the water and the trees and the stillness would all be bound in one. Like John
Donne, Peter Pickford, an African, tells the world and mortality itself - death
be not proud!

An earlier commentary by the Pickfords in the same book, which refers to the
fact of their having been "born into one of the last strongholds of colonialism
in Africa and lived in a privileged state of which, by default, (their lives)
were made", says:

"To regard the platform of one's life as the platform of absolute truth is to
wear blinkers so tight that the light of the world passes as a shadow before
you. In Africa, it is so pervasive an affliction that the continent's richness
and potential remain hidden not only to the outside world but to us who live
here (in Africa).

"This affliction of blinkered perceptions is contagious, so that, in the low
turning of the wheel of Africa's history from kingdoms, civilisations and
tribalism to colonial rule and then back to self-government, the world has in a
singularly successful indoctrination released on our continent the most
destructive force of all: Africans themselves blinded to their own virtue."

Happily, the Zambians seemed to break out of this mould, repeatedly reaffirming
Zambia's and Africa's richness and potential. Perhaps this was because for 40
years, they had escaped the terrible afflictions described in another 2004 book
about Africa.

This book is entitled 'A Continent for the Taking: The Tragedy and Hope of
Africa'. The author is an African American journalist, Howard W. French, who
worked in Africa over many years, reporting for the New York Times. Writing
about Zaire (now the Democratic Republic of Congo) during the years of Mobutu,
he says:

"Policemen, like soldiers, went unpaid, so they took their guns and badges as
licences to steal. Mobutu himself had openly sanctioned behaviour like this,
once telling his unpaid army to 'live off the land'.Theft had become the modus
operandi for the entire country.Many Zairans shrugged off their degeneration,
saying that things had been pretty much this way since the time of its
colonisation by Belgium, and in fact, this little bit of folk wisdom wasn't far
off the mark."

He also wrote about decay in Abacha's Nigeria, saying: "Nigeria had become one
of Africa's most tragic stories, as if a great family franchise had been run
into the ground by decadent nephews prematurely handed the reigns of management.
The callow nephews in this tale were army generals, and like Midas in reverse,
the officers who had run the country for the last decade had debased everything
they touched, starting, of course, with politics, which they had turned into a
contest of self-enrichment."

Far worse than all this, he writes about the obscenities of the Liberian civil
war, at one stage mentioning Prince Johnson, one of the rebel leaders who
participated in the violent campaign that overthrew the military regime of
Samuel Doe.

"Johnson's murder of Doe on September 10, 1990, gruesome, drawn out and filmed
in a herky-jerky cinema verité style, would become one of the signal events of
West Africa's post-independence history. As men sliced off Doe's ears, kicked
him and stabbed him, Johnson repeatedly demanded that Doe provide the numbers of
the Swiss bank accounts to which Doe, in the long tradition of African
dictators, had been sending off the money he stole from the treasury.

"A barely literate master sergeant, Doe had disembowelled his predecessor,
William Tolbert, in a 1980 coup and summarily executed twelve senior government
officials on a Monrovia beach.An awful, matching bookend for the end of the
decade, the videotaped dismemberment of Doe confirmed for shocked West Africans
that their politics were undergoing a hideous transformation, from the gentle
venality they were long accustomed to, into a horror show of almost biblical
cruelty. Few could have imagined though, that far worse was still to come."

None of these accurate reports represent what the Pickfords described as
"blinkered perceptions" of Africa. They constitute the counterpoint that
inspired the people of Zambia so passionately to reaffirm their commitment to
peace and respect for the dignity of the peoples of Africa.

In turn, the vision that inspires the Zambians gives the Pickfords and Howard
French the possibility to reject "blinkered perceptions" of Africa, confident
that ours is a continent of hope.

Howard French has written: "In the months after the fall of the Berlin wall, I
occasionally tried to persuade colleagues in the press to cast the changes under
way in Africa in the same epochal light that Europe was now bathing in. Africa's
dictators had been supported for decades by East and West, and were often
handpicked by outside powers. Their misrule had placed the continent in the deep
hole it now found itself in, not some congenital incapacity for modern
governance, as decades of shallow analyses about Big Men and 'ancient tribal
animosities' often insinuated.

"Amid talk of a 'peace dividend' at the end of the Cold War, I argued that the
West had every bit as much of a moral obligation to try to undo some of the
damage we had wrought in Africa as it did to help the Eastern Europeans.
Needless to say, my arguments were ignored.

"For Europeans, Africa has always been an irresistible 'other'. This may sound
like a tautology, but that does nothing to diminish the truth. Like the
indelible taint of original sin, the problem with Africa in the mind of
Westerners is that it is Africa."

Fortunate not to be imprisoned by "blinkered perceptions" of Africa, Howard
French says of his book: "My aim is to help remind those who yearn to know and
understand the continent better, and indeed Africans themselves, of the
continent's many cultural strengths; my own discovery of them kept me going
through otherwise depressing times, injecting relief in a tableau of terrible
bleakness. Therein lies a genuine source of hope for Africa's nearly 800 million
people and for the Africans of the future."

During August, the BBC World Service published the results of a survey it had
carried out in a number of African countries. The survey found that "While the
rest of the world might view Africa as a continent plagued by civil wars and
official corruption, and individual countries as bankrupt states with starving
populations ravaged by HIV/AIDS - the Africans surveyed see themselves quite
differently.

"Africans are generally positive about their lives, and they are proud to be
African. Pan Africanism with a strong local flavour dominates the way people see
themselves, other countries and the world.There is evidence of a strong feeling
of 'Africanness' and a pride of being an African. There is patriotism towards
one's country and the continent."

And so it turns out that, after all, the Zambians, the Pickfords and Howard
French represent the authentic voice of Africa, the voice of the millions of
Africans who have refused to be "blinded to their own virtue", influenced by a
"singularly successful indoctrination released on our continent".

Peter Pickford says he has "wander(ed) through Africa finding value and wonder
in what many, in the past and still today, view as a hopeless continent with, at
best, some engaging landscapes with a few quaint features. And I have been
astounded by their blindness.

"I love my land for all that it is to me and for all that I see in it. There is
always in Africa something to pierce the sense-numbing attributes of a
comfortable life and there is much to be said for feeling alive.

"Africa has thrown off the staid and proper ways the erstwhile colonialists
would have had it display. It wears a bright shirt, shoots from the hip and
bursts into song and dance, not because it is right or proper, but because it is
what is in the heart."

Thabo Mbeki

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APPROACHES TO POVERTY ERADICATION AND ECONOMIC DEVELOPMENT II

The Truth & the Asian Miracle

In an article "From Miracle to Crash" in the 16 April 1998 edition of the
'London Review of Books', Professor Benedict Anderson writes:

"Four basic conditions made the (East Asian) 'miracle' possible, and these
existed only in the long strip of coastal capitalist states stretching from
South Korea to the eastern edge of the Indian Ocean.

"The first was the peculiar arc of the Cold War in the region. Nowhere else was
it 'hotter' in the third quarter of the century, and perhaps nowhere else did it
cool down more rapidly, thanks to the Peking-Washington rapprochement of the
mid-Seventies.

"In every important country of South-East Asia, with the exception of Indonesia,
there were major, sustained Communist insurrections, and Indonesia, in the early
Sixties, had the largest legal Communist Party in the world outside the
socialist bloc.

"The notorious domino theory was invented specifically for South-East Asia. To
shore up the line of teetering dominoes, Washington made every effort to create
loyal, capitalistically prosperous, authoritarian and anti-Communist regimes -
typically, but not invariably, dominated by the military.Each disaster only
encouraged Washington to put more muscle and money behind its remaining
political allies. No world region received more 'aid'.

"On the other hand, the Washington-Peking coalition against Moscow, consolidated
after the 'fall' of Indochina, meant that from the late Seventies till the
collapse of the Soviet Union those countries of South-East Asia who so wished
could continue to profit from Washington's Cold War largesse without facing any
severe internal or external constraints (the Philippines was a partial
exception, as we shall see)."

To reach their "take off" levels of development, these countries depended on
this "Washington's Cold War largesse". (Here we will refer only to Japan, South
Korea and Taiwan).

Here we also need to take note of Professor Anderson's remarks with regard to
the other "Asian tigers". He says:

"The second, accidental condition (for the emergence of these 'tigers') was the
region's propinquity to Japan.Beginning with the acquisition of Taiwan in 1895,
and the annexation of Korea in 1910, Japanese ruling élites sought by economic,
political and military means to create for their country, in East and South-East
Asia, a zone of hegemony equivalent to that of the United States in the Western
hemisphere.

"In the period of postwar recovery, the old (Japanese) ambitions did not
disappear, but took an essentially economic form. Assured of its political and
military dominance over Japan, and eager to make the Japanese economy a
cornerstone of capitalist strength in Asia, Washington put no real obstacles in
Tokyo's way.

"In those early postwar years, however, Mao's China was closed to Japanese
capital, and the South Koreans' bitter memories of Japanese colonialism made
them scarcely more welcoming. South-East Asia was the only real possibility, not
least because Europe had now lost its colonial fortresses there.

"Beginning in the Fifties, thanks to a series of war reparations agreements
whereby Japan provided substantial funds to South-East Asian countries for the
purchase of its manufactures, Tokyo's economic presence rapidly increased: first
in Thailand, which had been an ally in World War Two, later in other new nation-
states which had had less pleasant experiences under Japanese military rule. By
the early Seventies, Japan had become the single most important external
investor in the region, both as extractor of natural resources (timber, oil and
so on) and in industrial and infrastructural development.

"All this meant that South-East Asia was the only region in the world in which
the two most powerful capitalist economies were deeply and, on the whole co-
operatively, committed for four decades. Later, when South Korea and Taiwan in
their turn became major exporters of capital, they followed the leading goose,
reinforcing the already huge inflows of capital and technology from America and
Japan."

Not models of free trade

With regard to South Korea and Taiwan, here is what World Vision, New Zealand,
had to say.

"South Korea and Taiwan are often promoted as countries that have developed and
reduced poverty substantially through free trade and investment, not aid. It is
true that they have been spectacularly successful in reducing poverty, but
otherwise this claim is wrong on all counts.

"In fact, both countries received massive amounts of aid from the United States
during the Cold War, because of their role as bulwarks against communism. They
also received loans from the US on very generous terms. Very little of their
capital came from FDI [foreign direct investment]. Between 1951 and 1967, FDI as
a percentage of total long-term capital flows was only 1% in South Korea and 8%
in Taiwan. Over the same period, foreign aid and loans made up 86% and 74% of
such capital flows to South Korea and Taiwan respectively.

"Far from being models of free trade and investment, South Korea and Taiwan
subsidised their industries heavily and protected them with tariffs and other
barriers. They also carefully controlled investment. In addition, the US opened
its market to their goods, without requiring them to open their markets to US
goods in return.

"More recently, South Korea and Taiwan have liberalised trade and investment.
However, this happened after they had built up highly successful industries
under conditions of protection. It was a case of development first, then
liberalisation, rather than the model of development through liberalisation
promoted by neo-liberal economists.

"South Korea and Taiwan industrialised under very specific conditions that
cannot necessarily be repeated in other countries. Through much of their post-
war development they were also ruled by authoritarian and repressive regimes,
with little regard for human rights. For these and other reasons, they may not
provide good models for other developing countries to follow. But if they are
useful examples, it is certainly not as models of development through free trade
rather than aid."

Chakravarthi Raghavan made the same point in a 22 May 1996 article in 'Third
World Network Features', entitled "East Asia proves World Bank theory wrong". He
wrote: "Some of the most successful East Asian and South-East Asian economies,
during the period 1971-1980 show a small ratio of FDI to total investment. It
was only 0.1% for Japan, 5% for Hong Kong, 1.2% for the Republic of Korea, 1.3%
for Taiwan, and 14% for Malaysia. China, which is less integrated into the world
economy than Korea, had a 10.4% ratio of FDI to total investment."

In his article published by the Nautilus Institute, "Notes From Ground Zero:
Power, Equity and Postwar Reconstruction in Two Eras", Mark Selden said the
following about Japan:

"The US articulated practices of postwar reconstruction in which the victor
contributed to the rehabilitation of the vanquished as well as of its own
allies. The result was to reverse the dominant logic of war reparations in which
the defeated were customarily further bled by the victors. Nevertheless, postwar
reconstruction of defeated industrialized nations became one pillar of a
hegemonic strategy designed to accelerate restoration of international trade and
investment while subordinating others militarily.

"Postwar reconstruction after 1945 was attuned to American strategic priorities.
The US aided in the relief, rehabilitation and reconstruction of defeated
enemies, notably Germany and Japan, while providing assistance to selected
European allies whose recovery was central to rebuilding the world economy in
line with American interests.

"The bonanza of Korean War procurements that fueled Japan's economy from 1950
was critical to reconstruction. With the US assuring Japan's security, domestic
investment could be concentrated on economic, infrastructure and social
reconstruction. The occupation gave rise to a shared US-Japan vision of an
economically robust and democratic Japan within the ambit of American power in a
post-colonial Asia divided along Cold War lines.

"Not all Japanese occupation programs proceeded smoothly, of course. Deadlock
between different sections of the occupation, and at times between the
occupation and the Japanese administration, meant that programs designed to
dismantle the zaibatsu, the large economic-financial combines that dominated the
prewar economy and that occupation authorities initially identified as the
driving force behind Japanese militarism and colonialism, were stillborn.
Likewise, the occupation's reverse course of 1947, driven by mounting Cold War
concerns and the anticipation of a Third World War, led to an attack on labor
and progressive forces generally.

"By contrast, programs that enjoyed strong popular support including the peace
constitution, land reform, the vote for women, and numerous health and welfare
measures, not only were fully implemented but were sustained following the
formal end of the occupation in 1952, despite US pressures to scale back some of
the most far-reaching reforms."

Further to this, writing in 2002 about elements of the economic history of
Japan, Toyoo Gyohten, President of the Institute for International Monetary
Affairs, said:

"In the 1950s and 1960s, Japan received a great deal of benefits from
international organisations, both financially and institutionally. In
particular, the World Bank provided financial assistance for the post-war
reconstruction of Japan, starting with a loan to the Kansai Electric Power
Project in 1953, when a stable supply of electricity was a top priority. During
the next 13 years, Japan received financing from the World Bank, equalling
US$863 million, for 31 reconstruction projects, including dams, highways, and
bullet trains.

"It should be noted that the World Bank provided not only the financial means,
but also the expertise needed for the economic infrastructure, which greatly
contributed to Japan's rapid economic recovery and development. Japan was able
to graduate from World Bank borrowing in 1966, and finished repayment of all
loans by 1990.

"Under the international monetary system of the Bretton-Woods regime, Japan
benefited from the fixed rate of exchange where the yen was undervalued for a
long time, at 360 yen to the dollar. This arrangement provided a foundation for
the development of Japan's industries."

In addition to all this, we must take into account that the US special programme
instituted to procure as much of its defence requirements from Japan as
possible, provided about 30% of Japan's foreign currency receipts in the early
1950s. Like the US initiated under-valuation of the yen and the opening of the
US market to Japanese textiles, this constituted a deliberate intervention to
accelerate the growth of the Japanese manufacturing sector.

In a 1996 paper "Capital Accumulation Key To East Asia Miracle", Chakravarthi
Raghavan discusses the important issue of savings and investment. What we have
said above shows the critical role of foreign savings in helping to bring about
the Japanese and East Asian "economic miracle".

It is however also true that, in time, domestic savings came to play the
predominant role in terms of providing the necessary investment capital. In this
regard, Raghavan says: "However important initially these (foreign capital)
inflows, gross domestic savings rose to very high levels - in Japan from 24% in
the early 1950s to 36% in the 1960s and 40% in the 1970s; in Singapore from 10%
of GDP in 1965 to 30% in the 1970s and 42% in the 1980s. In Korea and Taiwan
from about 4% and 9% during 1956-1960, it rose rapidly to an average of 32% by
the 1970s in Taiwan and 22% in the 1970s and 32% in the 1980s in Korea."

However, he also makes some important observations about these savings,
essentially pointing to the importance of corporate as opposed to household
savings, including the role of the state in this regard. He writes:

"In all these countries corporate savings accounted for a very large share of
corporate investment and in East Asian NIEs (Newly Industrialised Economies), it
was not household but corporate savings.

"In most East Asian NIEs, other profit-related income also contributed to a rise
in domestic savings. Personal savings and corporate profits in East Asia were
linked to profits through the bonus system - tying a significant part of
workers' pay to company profits.

"Government policy played an important role in growth of corporate profits and
savings. Fiscal instruments were used to supplement corporate profits and
encourage retention to accelerate capital accumulation. Trade, financial and
competition policies raised profits above levels that would have been attained
under free market conditions, thus creating rents.

"Fiscal instruments included various tax breaks and special depreciation
allowances to encourage enterprises to retain and invest profits.

"But State created rents were important. These rents were created through a mix
of selective protection, controls over interest rates and credit allocation,
managed competition including encouragement of mergers, coordination of capacity
expansion, restrictions on entry into specific industries, screening of
technology acquisition and promotion of cartels for specific purposes such as
product standardization, specialization and exports.

"Credit subsidies were essential for investment in new industries, as also
credit rationing which could not merely be viewed as instrument for 'picking
winners', but enabling rent creation and capital accumulation.

"The rent creation through protection was linked to export performance.

"Most of the fiscal instruments and rent-creations were focused in a deliberate
concerted way on specific industries at particular moments in time - they did
not just reallocate given resources across various sectors, but made a
significant addition to the overall rate of accumulation.

"This creation of rents.was central to the process of accelerating capital
accumulation and growth and establishing new industries. It contradicted the
theory of rent-seeking under inward-oriented-trade regimes developed in the
1970s and 1980s.

"The reciprocity between government support and private sector performance
entailed a faster rate of capital accumulation and growth - not only because
support was often provided in exchange for higher investment, but also because
better export performance as a measure of quality of investment necessitated
faster accumulation in order to raise competitiveness through adaptation of new
technology, scale economies, learning and productivity growth."

The elements of monopoly

As we approach the conclusion of this section, we must draw attention to a
particular form of corporate organisation in the three East Asian countries we
are discussing.

We have already quoted Selden as saying that the US occupation authorities in
Japan failed to break the economic stranglehold of the "zaibatsu", the family
owned monopoly conglomerates that dominated the pre-war Japanese economy.

The 21 January 1999 'San Diego Daily Transcript' carried an article by John
Patrick Ford entitled "Monopoly is not a game". He wrote:

"American-style monopolies were personified by dynamic and ruthless
entrepreneurs in the late 19th century. John D Rockefeller and Andrew Carnegie
come to mind with their vast empires in oil and steel being financed by the
likes of JP Morgan.These tycoons forged industrial empires that made America a
world power.

"The same scheme worked for free-market Asian nations. All the elements of
monopoly flourish today in South Korea with cliques called chaebols and in
Taiwan with similar groups named guanxiqiyes. There certainly are differences
from the American example or even from the Japanese (zaibatsu) root stock.Post-
war reconstruction in the former (South Korean and Taiwan) colonies retained the
same (zaibatsu and post-war Japanese) keiretsu system, but with some variations
to suit the local culture.

"A major change from the pre-war Japanese model was the leverage of American
capitalism. With abundant US foreign aid to rebuild devastated industries, a
blend of Asian monopoly with American free-trade emerged in South Korea and
Taiwan. Larger Korean chaebols got their start after the country's liberation in
1945. Thoughtful entrepreneurs utilised the urgent needs of politicians to stay
in power. Bribing the ranking bureaucrats gained them preferred access to
government funds.

"Real growth came after the corrupt Syngman Rhee regime was discarded in 1950.
Succeeding military junta regimes needed strong business connections to
stabilise their administrations. Any newcomers in the monopoly game depended on
government subsidies. Even the largest chaebol can be humbled by politicians who
were not on the payroll.

"Validation of the chaebol structure came in 1983 as sales of the fifty top
groups accounted for 94 percent of GNP. Only 10 ruling families control 30 of
Korea's largest firms.

"Taiwan is an island of only 14,000 square miles and half the population of
South Korea. Yet this 'orphan' nation ranks 15th in world trade, boasts the
third-largest foreign reserves, and is one of the lowest foreign debtors.

"Taiwanese monopolies, also cloned from the Japanese model, are called
guanxiqiye. It's the Chinese-language equivalent to the same Korean and Japanese
words.Taiwanese monopolies bear less imprint of state and more vitality of
culture and market in their design.Typical is a cluster of enterprises owned and
controlled by a group bound by an ancestral network. Such a clique is called an
oligopoly to distinguish it from American-style monopoly.

In the comments cited earlier, Chakravarthi Raghavan has explained the economic
interaction between the East Asian monopolies, described by John Ford, and the
ruling groups in these countries. In this context, we must also take particular
note of the observation made by World Vision, that "through much of their post-
war development, (South Korea and Taiwan) were also ruled by authoritarian and
repressive regimes, with little regard for human rights."

Obviously, this short presentation on the "Asian tigers" does not and cannot
cover all the details that bear on the successful development model that turned
these recently poor countries into the success stories they are. We must now,
however, state some of the main conclusions drawn from this experience.

As was the case with Western Europe, the US intervention in the Asian Far East
represented a conscious, purposeful and determined response by the then most
powerful country in the world to what it considered an imminent Communist danger
to its survival.

To ward off this strategic danger, the US was ready to spend whatever was
necessary and required.

It understood that so big was the challenge it faced that it could not rely on
"the market", the private sector, and especially foreign direct investment, to
provide the resources to meet this challenge. In the end, this translated into
aid and loans.

It was accordingly ready and willing to use public funds to provide the
investment and other resources that would enable the Far East Asian economies to
reach their "take off" point.

It ensured that the World Bank played the development role from which it was
largely excluded in Western Europe, adding multilateral resources to the
investment funds available to the East Asian economies. It was also ready and
willing to open its own market, and the markets of its allies, to guarantee the
Asian economies a market for their products, as well as deliberately engineer
the under-valuation of the Asian currencies to encourage Asian exports and
discourage imports into the targeted Asian countries, thus opening the space for
an import-substitution industrial strategy.

Rather than argue that governments had to minimise their role in the economy, it
proceeded from the position that these governments had a central role to play in
the achievement of the goals of the East Asian Development Programme.

It accepted the entrenchment and protection of monopolies and the formation of
an interdependent political and business elite that would act as its partner in
driving the Development Programme, regardless of the economic distortions that
would result from this arrangement.

It accepted that this elite should function in an authoritarian manner, with no
respect both for democracy and human rights, to give it the possibility
especially to suppress any revolt by the workers and the ordinary people,
provoked by the blatantly and almost exclusively pro-business policies of the
target countries.

As in Western Europe, the US accepted that in the case of Japan, it had to allow
for the development of a welfare state, to ensure the quiescence especially of
the working people, without having to rely predominantly on repressive methods.

Having ensured the economic recovery of Japan, the US was happy to assign to her
the role of ensuring the economic development of the other "Asian tigers" in
South East Asia, which coincided with Japan's own historic interest to be the
dominant power in this region of the world. The dominant world power, the US,
was pleased that the emerging Japanese economic powerhouse, already tied to the
US, could take over the task of ensuring that this region was "saved from
communism", while it attended to the same task in the rest of the world.

The Far East Asian intervention so succeeded in the context of the set
development objectives of the post-war intervention by the US, that in 1993, the
World Bank issued a report entitled "The East Asian Miracle: Economic Growth and
Public Policy".

Contrary to what we have said about the East Asian "tigers", the August-October
1993 World Bank Policy Research Bulletin, gave a different account of "The
making of the East Asia miracle". It wrote:

"What caused East Asia's success? In large measure the HPAEs (High Performing
Asian Economies) achieved high growth by getting the basics right. Private
domestic investment and rapidly growing human capital were the principal engines
of growth. High levels of domestic financial savings sustained the HPAEs' high
investment levels. Agriculture, while declining in relative importance,
experienced rapid growth and productivity improvement. Population growth rates
declined more rapidly in the HPAEs than in other parts of the developing world.
And some of these economies also got a head start because they had a better-
educated labor force and a more effective system of public administration.

"Fundamentally sound development policy was a major ingredient in achieving
rapid growth. Macroeconomic management was unusually good and macroeconomic
performance unusually stable, providing the essential framework for private
investment. Policies to increase the integrity of the banking system and to make
it more accessible to non-traditional savers raised the levels of financial
savings. Education policies that focused on primary and secondary schools
generated rapid increases in labor force skills. Agricultural policies stressed
productivity and did not tax the rural economy excessively."

To the extent that any of this might be true, it describes a later stage of the
Far East Asian development process, beyond the "take off" point achieved through
the earlier post-war intervention of the US.

To come down to earth, away from the heady "market friendly" heights idealised
by this World Bank presentation of the East Asian "miracle", we will next
undertake a brief examination of a contemporary development process, the
European Union (EU) Regional Policy.

** This is part three in a special series of articles about global approaches to
poverty eradication and economic development. Next week: 'Bridging the EU
development gaps'.

MORE INFORMATION:

Part One: Beware of the Natives!
http://www.anc.org.za/ancdocs/anctoday/2004/at41.htm#art1

Part Two: Rescued by the Marshall Plan
http://www.anc.org.za/ancdocs/anctoday/2004/at42.htm#art1

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TRIBUTE TO DUMISANI MAKHAYE

A revolutionary, a communicator and one of two real intellectuals

Very few people who crossed the path of the late Dumisani Makhaye are likely to
forget their encounter. Whether embraced as a comrade or chided as a
reactionary, Makhaye looms large in the memories of the many people who had the
privilege to know him.

Makhaye, who passed away this week after a long struggle with cancer, is to be
buried in Durban this weekend.

A revolutionary of firm conviction and frequently strident views, Makhaye was a
disciplined and principled champion of the struggle for national liberation.
While he seldom walked away from any ideological battle, he was nevertheless
prepared to consider new ideas and perspectives.

A member of the ANC's National Executive Committee (NEC), Makhaye was a
respected leader and intellectual. His capacity for debate and political writing
was matched by his legendary 'self-appreciation', walking a fine line between
dry humour and unabashed self-confidence.

Many people remember Makhaye's oft-repeated claim that there were only two real
intellectuals in the NEC - himself and President Thabo Mbeki. There were a few
others, he would acknowledge with a wry smile, who nevertheless made an earnest
effort.

Having been elected to the NEC in December 1997, Makhaye attended NEC meetings
religiously. This, he said, was necessary to ensure that the other members of
the NEC didn't go awry, taking decisions that were contrary to the interests of
the liberation struggle.

He would always sit close to the front of NEC meetings. This, he would say, was
so that he could be closer to the seat of power and have a greater impact on NEC
debates. Those who sat at the back of such meetings could not be taken
seriously, he said. For the past seven years, Makhaye would maintain, he worked
diligently to keep the national leadership of the ANC in check.

He was only half joking. For Makhaye understood that every cadre has a
revolutionary responsibility to ensure that the struggle advances, and that the
course it takes is informed by an accurate analysis of the balance of forces and
understanding of available strategies and tactics. Makhaye participated actively
in meetings of the NEC and other structures not because he liked the sound of
his own voice (which he clearly did), but because he understood that it was his
responsibility to help steer the course of the revolution.

He devoted himself to organisational tasks with vigour and application,
accepting deployment to any part of the country to attend to any political task.
He valued the importance of political discipline, and worked to instill it into
the many young cadres who he developed and mentored over the years.

He appreciated the importance of political debate and deepening political
theory. He was constantly studying, debating and writing. He was always
available to conduct cadre development sessions and political schools.

Makhaye was a great communicator, starting from his days in the ANC Department
of Information and Publicity in Lusaka. He was largely responsible for the
development of the ANC's substantial communications machinery in KwaZulu Natal,
often beating headquarters to the punch to comment on major national issues. His
articles and letters were frequently in the papers, and his voice was often
heard on radio talk shows.

His comments had a tendency to put certain noses out of joint. That did not
bother him, because his comments were meant for the masses of the oppressed. He
spoke to their needs and their interests; he spoke honestly and without
equivocation and thereby earned himself a special place in the hearts of the
people.

Dumisani Makhaye will be remembered for many things by many people. Some will
remember his writing, others will remember his dedication to Orlando Pirates.
Many will remember his stylish attire, and his often daring attempts to redefine
political fashion. Others will remember his good-humoured bluster: he dressed so
well, he maintained, because he came from KwaMashu, a large metropolitan
township, not from "some small village in the Eastern Cape".

Yet all will remember him for being a dedicated, honest and courageous freedom
fighter; an able teacher; and a passionate intellectual. No one is likely to
forget him.

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