ANC Today

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Volume 4, No. 48, 3-9 December 2004

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THIS WEEK:

* Letter from the President: A workers' leader, a women's leader, a people's tribune
* Approaches to Poverty Eradication and Economic Development VIII: Empty bellies have no ears
* Functioning of the Alliance: Setting the record straight

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LETTER FROM THE PRESIDENT

A workers' leader, a women's leader, a people's tribune

Once more death has visited us without warning, to take away from us a star on
our galaxy of heroines and heroes that, for many years, served as one of our
guiding lights as we traversed the stony path to a future world of a dream that
had to be realised.

Joyce Lesawana Kgoali had to us become the Chairperson. I have heard her voice
and obeyed her commands as she chaired the National Parliamentary Caucus of the
African National Congress. I have heard her voice and followed her directions as
she chaired the National Council of Provinces.

Unhappy circumstance has now decreed that we will forever be denied the
opportunity fondly and respectfully to presage our words uttered in her
presence, with the respectful salutation - Madame Chairperson! Once more and too
early in the life of our infant democracy, death has taken away from us one of
the midwives of our season of hope.

I have the privilege to present to the nation what might serve as Joyce Kgoali's
epitaph. I speak of a possible epitaph she herself proclaimed in March 1999, as
she celebrated new achievements of the women of our country, made possible by
the emergence of the great spaces of light born of the freedom for which she had
fought.

She was speaking of life and not death, of what the women of our country had to
do to walk into the space of light when, five years ago, she said: "Women are
expected actively to heal our nation. We cannot afford to be paralysed by pain,
fear and ignorance. We have all been given an opportunity to learn from each
other. As a woman ready to lead a male dominated department I was paralysed,
though at first, when I looked around me, I knew I could fail the women of this
(country) by not taking the opportunity to rise beyond my fear. Today, standing
in front of you I feel humbled and honoured with the support I have received
from (the women of South Africa)."

Today, fully ten years after our liberation, standing before the confined world
of the sarcophagus that contains the mortal remains of the great being that was
our Madame Chairperson, we must admit to what she said. Our nation needs still
to heal its wounds, to temper the lingering pains and assuage the persistent
hurts.

We must admit to what she said, that women are expected actively to heal our
nation. We must do this because the person who presented this challenge to our
women and our nation, our Madame Chairperson, had earned the right to demand of
all of us that we should open our ears, our eyes and our minds to what she said
and did.

She earned that right not because she demanded it. She acquired it not because
she sought it. She became our teacher because of the moral power and authority
she accumulated, derived from her selfless service as a foot soldier for
freedom.

A woman of the people, she did service as a workers' leader, a women's leader, a
people's tribune, our Madame Chairperson, because the people themselves, the
ordinary masses from whom she came, saw in her a trustworthy servant whose only
life purpose was to serve the people of South Africa.

They saw reflected in their mirror one of their own, a replica of themselves
who, nevertheless, had the moral courage, the intellectual capacity and the
depth of passionate commitment to cultivate and project the vision that set her
apart, but did not separate her from the ordinary folk whose aspirations defined
who she was.

And yet this quiet titan in our ranks, a heroine who was prepared to risk her
life to give freedom a chance to emerge out of the chrysalis, spoke still of the
fear of failure. The fact of the freedom we had won through the struggle she
waged told her that new struggles remained to be waged and new victories won.

These new struggles demanded of the new combatants for the victory of the vision
a better life for all that they should liberate themselves from the paralysis
induced by the sustained pain of past wrongs, fear of the future and the
ignorance imposed on the majority in the past to ensure its permanent
oppression.

Accordingly, as she read out her epitaph, our Madame Chairperson, Joyce Kgoali,
spoke out and said "we cannot afford to be paralysed by pain, fear and
ignorance". She said that whatever the new challenges we had to confront as a
reward of freedom, we had to take the initiative to plough virgin land and thus
rise above our fears of venturing into the unknown.

She said we have a duty to refuse to be imprisoned by the past, such that that
past imposes such shackles on us that we would fail to respond to the challenge
to build a society of hope that would arise out of a catastrophic past of
hopelessness and despair.

She said that the women of our country had to generate the courage to lead our
country to realise its objectives of reconstruction and development. She said
that if the women of our country aware of their tasks in this regard, sustained
the fight for progressive change, as the women who bestowed on us the gift of
August 9th, our National Women's Day, did, they would enjoy the gift of the
support and solidarity of all the women of South Africa.

She said that the opportunity that freedom gave to the women of our country to
learn from one another, together to correct the mistakes that will inevitably be
made as they work to create the new without the benefit of precedent, together
to learn how to lead, whereas in the past the women had no choice but to be the
led, the women engaged in struggle for progressive change should know that in
the end, they will feel humbled and honoured with the support they will receive
from the women and people of South Africa.

We have gathered to say our last farewells to our Madame Chairperson, Joyce
Kgoali. But we shall say those farewells not to bid farewell to what she did and
what she stood for.

Instead, as we part with her, we feel duty bound to defend what she stood for,
to complete the unfinished work she would have done if death had not cut short
an extraordinary life that would have blessed us with an expansion of our
frontiers of freedom.

Our country has great need of such patriots and heroines as Joyce Kgoali was.
She came to stand on the high pedestals she occupied not because she was a
product of a clever public relations exercise.

She became one of our lodestars because the ordinary things she did as a fighter
for liberation and an architect of a new society of hope communicated the
message that the ordinary masses, the wretched of the earth, must and will be
the true architects of the new South Africa we are working to build, the new
South Africa that inspires millions in Africa and elsewhere in the world to
sustain their conviction that it is possible to create a new social order that
serves the interests of the people.

She became who she was because she was a worker who never forgot what it is to
be a black worker, and never turned her back on or betrayed the struggle to
realise the aspirations of the working people.

She became who she was because she was a black woman who never forgot what it is
to be a black woman, and never turned her back on or betrayed the struggle to
realise the aspirations of the black and other women of our country, Africa and
the world.

Her presence among us, a combatant for the realisation of the aspirations of the
workers, the women and our people as a whole, guaranteed that the democratic
order would not lose its way. It made certain that the democratic revolution
would stay on course with regard to its tasks, to advance the interests of our
working people, and remain loyal to the fundamental task to secure the
liberation of the women of our country.

The democratic revolution in our country is in its infancy. It has just begun
the task to eradicate a legacy of three-and-a-half centuries of unjust rule that
imposed a life of misery on the overwhelming majority of our people.

The problems we have still to overcome are many and varied. Joyce Kgoali knew
these problems well. She knew them not because she had read about them in books.
She knew them because she too had experience of them.

Because she knew what it meant to be oppressed and discriminated against because
of the colour of her skin she engaged in struggle to defeat the evil system of
apartheid and eradicate racism from our midst.

Because she knew what it meant to be forced into the condition of poverty, to
suffer from the dehumanisation imposed by poverty and want, she engaged in
struggle to create the conditions that would permit our nation to join together
to strive for the realisation of the goal of a better life for all.

Because she knew what it was to bear the burden of triple oppression because of
her gender, she made certain that the emancipation of the women of our country
became a defining feature of our democracy.

The long road we still have to travel to answer to the pain she and her people
suffered because of unjust rule requires that we should have others such as her
in the vanguard. It requires that the nature of the progressive change we seek
should be defined by the thoughts and deeds of courageous patriots such as Joyce
Kgoali.

We mourn her untimely loss because the tasks of the day do not permit that we
should be robbed of her leadership. We grieve at her departure because we know
how difficult it is to find genuine cadres of progressive change who are not
driven by personal ambition but are truly committed to serve the people.

As we bid her farewell, it is our duty to make the solemn pledge that we will
always emulate her example and honour her memory by faithfully continuing the
struggle to which she dedicated her life.

I am privileged to convey the condolences of our government and our people as a
whole to her dear husband, Godfrey Nhlanhla Simelane, her mother, her children,
her grand children and the rest of her family.

Farewell Madame Chairperson. Farewell Comrade Joyce. You did all you could to
heal the nation. Though you are no longer with us, your memory will never
perish. May you rest in peace.

Thabo Mbeki

This is an edited version of the oration delivered at the funeral of Comrade
Joyce Kgoali, 28 November 2004.

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APPROACHES TO POVERTY ERADICATION AND ECONOMIC DEVELOPMENT VIII

Empty bellies have no ears

The global contest between the different development models also entails a
dispute about the overall impact of the process of globalisation. There are many
who argue that in general, this process has expanded human welfare throughout
the globe. These advance the view that the hopes of the poor and underdeveloped
countries of the world for a better life lie in their integration within the
global economy.

In an article published in the 'Financial Times' on 24 January 2001, entitled
"Growth makes the poor richer", its well known columnist, Martin Wolf, says "One
thing, above all, is quite clear: if the world is to become less unequal through
raising the bottom, rather than collapsing the top, and still more if mass
poverty is to be eliminated, it can only be via successful integration, not its
opposite."

We must however counterbalance this prayer to the future with global experience
to date. For an account of this experience, we shall rely extensively on a May
2001 paper written by Professor Robert Hunter Wade of the London School of
Economics, entitled "Is Globalisation Making World Income Distribution More
Equal?" He writes:

"If we are interested in world income distribution from the point of view of
most of the issues that concern the world at large.the conclusion is
unambiguous: world income distribution became much more unequal over the past
quarter century, whether we use decile distributions or an average coefficient
like the Gini and whether we weight individuals or countries equally.

"Moreover, the gaps in 'real' well-being are probably bigger than the income
figures suggest.Those in the bottom half of the world income distribution have
incomes that are not only lower but also more insecure, and they have probably
faced rising insecurity over the 1990s (much of the new employment in low income
areas is in jobs subject to short-term contracts and immediate dismissal.).

"Most of the increase in inequality reflects the increase in the proportion of
the world's households located at the extreme rich end and the extreme poor end
of the world income distribution. On the one hand, population growth adds
disproportionately to numbers at the poor end. On the other hand, technological
change results in disproportionately fast increase in the numbers of households
at the rich end, without shrinking the distribution at the poor end.

"The prices of the industrial goods and services exported from high-income
countries are increasing relatively faster than the prices of goods and services
produced in low-income countries that do not enter into international trade.
These price trends mean that the majority of the population of poor countries
are able to buy fewer and fewer goods and services that enter into the
consumption patterns of high-income country populations.

"The poorer countries and the poorer two thirds of the world's population suffer
a double marginalisation: once through slower growing output, again through
falling relative prices.

"The capital inflows tend to occur when economic growth is relatively fast, and
the combination of fast growth and capital inflows together tends to boost asset
prices, which benefits mainly the rich (asset owners). The benefits to the poor
take much longer to accrue through higher employment and government spending on
services. So the capital inflows tend to widen national income inequality.

"When a shock hits (as a result of financial crisis in a situation of financial
liberalisation).the crisis ricochets around the economy, causing layoffs, falls
in demand, rises in inventories, bankruptcies, cuts in government services,
unrest. While the benefits of the capital inflows are shared 'oligarchically',
the costs of the crisis are shared 'democratically', with immediate impacts on
the poor and on the middle class which had taken on lots of debt during good
times.

"The crises cause not only instability of developing country growth rates; they
also cause a tendency to lurch towards another set of economic policies - even
though there may be no good evidence that the previous policies caused the
crisis. The most dramatic case in point is the wholesale revulsion towards
'import substitution' in Latin America in the wake of the 1980s debt crisis, and
the embrace of neo-liberalism. The crisis was due largely to mismanagement of
the capital structure (the debt structure) - the governments borrowed too much
and the lending banks, mostly American, lent too much relative to the countries'
capacity to pay.

"But instead of seeing this as the cause of the crisis, the governments,
encouraged by the IMF and the World Bank and the US Treasury, abandoned a set of
economic policies that had in fact generated high growth in the 1960s and 1970s,
and put in place a standard package of neo-liberal market opening measures.
These have not delivered high growth, and they have resulted in high levels of
(corporate, household and sovereign) indebtedness.Even 'The Economist', no foe
of income inequality, agrees that rapid market liberalisation is likely to widen
income inequalities.(5 November 1994).

"(Another cause of the growing income inequality is) the continuing
redistribution of income in the OECD countries through the tax system and the
welfare state, which in the case of the UK in 1992 reduced the ratio of the
income of the top 20 percent of Britons to the poorest 20 percent from 25:1
before taxes and transfers to 7:1 afterwards. This welfare state system prevents
anyone living in the OECD countries from falling very far down the world income
distribution. And of course it gives a huge incentive for people living
elsewhere to try to enter the OECD world by whatever means possible.

"The richest 10 percent of the world's population is pulling up from the median,
and the poorest 10 percent is falling away from the median; the world middle
class, so to speak, remains tiny, while the gulf between the 15 percent of the
world's population living in the richest countries and the three quarters living
in the poorest countries remains huge.

"Income divergence helps to explain another kind of polarisation taking place in
the world system, between a zone of peace and a zone of turmoil.At least for
those in the top half of rich country income distributions, this is a blissful
time to be alive. On the other hand, the regions of the lower and middle income
pole contain many states whose capacity to govern is stagnant or eroding, mainly
in Africa, the Middle East, Central Asia, Russia, and parts of East Asia. Here a
rising proportion of the people find access to basic necessities restricted at
the same time as they see people driving Mercedes - on television if not outside
their own windows.

"World inequality matters as an indicator of global political strain. But it
also matters for more directly economic reasons, as an indicator of the limits
of growth of the rich countries. Marginalisation of poor country populations
robs rich country producers of customers.

"The US after World War Two realised that its own growth would be imperilled if
it did not redistribute massively to Europe, including the defeated states. The
Marshall Plan redistributed around 4 percent of US GDP for several years in
order to generate in Europe the purchasing power needed to buy US goods, as well
as to keep communist movements from state power.

"Today, resource transfers from rich countries to poor, and downwards
redistribution within poor countries (including via the mechanisms used in the
West, such as collective action by the poor and slowly rising legal minimum
wages or earned-income credits), are in the collective interests of the rich
countries as the Marshall Plan was to the United States. Those who respond to
evidence of rising world inequality by saying, 'pulling up the poor still
remains a nobler calling than pulling down the rich', overlook this. Without
downwards redistribution, the rich may not remain rich.

"It might be argued (as did Martin Wolf), that since the biggest increase in
poverty came in Africa, central Asia, rural India and rural China - places not
connected to the global economy - this shows that globalisation works to reduce
poverty. The solution for these areas is fuller integration into the world
economy - more globalisation rather than less. (This position) begs the question
of the conditions for 'successful integration'.

"People in the bottom deciles suffer from the weakness of capitalist development
in the regions where they live. The question of development policy is whether
this weakness can be cured mainly by opening up their markets, investing in
infrastructure, removing price distortions, and strengthening the rule of law.
Many economists say that the positive correlation between average incomes and
countries' integration into the world economy (high trade to GDP, for example)
supports the case for a development strategy based on maximum integration.

"But this argument obscures the distinction between the policies that the richer
countries followed while they were getting rich and those they followed once
rich. The East Asian states achieved great economic success.by creating national
economic space that was partially separate from the world economy, within which
resources could be combined and made to produce nationally-marketable products
even when those products would not have been able to compete against import
substitutes; at the same time as they gave strong incentives for producers to
export to world markets.

"They recognised - as did the World Bank and even the US government in those
days - that if they just concentrated on 'levelling the playing field', the
players might not show up and those who did might include few of their
nationals. Their strategy for creating self-generating development and
integrating into the world economy in a strategic way fits neither of the two
alternatives - full-scale integration or isolation - that Martin Wolf, among
others, pose.

"In particular, they were careful about the terms on which they allowed foreign
capital to enter (whether in the form of direct foreign investment or loans),
and about the liberalisation and opening of the financial system. In the 1990s
Korea abandoned its earlier caution as it came under heavy US pressure to open
its financial markets in return for US support of its OECD membership. It was
rewarded by being far more adversely affected by the Asian crisis of 1997-98
than nearby Taiwan, which remained more cautious about financial liberalisation
and opening.

"In African conditions today, what possibility is there of national populations
which are 50 percent functionally illiterate and innumerate getting access to
the productivity gains of new technologies? In open competition with labour
forces and infrastructures elsewhere, they will always lose, however low the
exchange rate (except where high transport costs give natural protection).

"They should put up partial barriers as the East Asians did, behind which partly
different rules apply, so as to balance (a) the benefits of comparative
advantage and competitive discipline, against (b) the benefits of putting
resources to work that could not be profitably put to work in a fully open
economy. They should have a partly closed capital account, and should take care
to minimise the 'inverse correlation' in their capital structure (minimise the
extent to which repayment obligations are lower than capacity when capacity to
repay is higher and higher when capacity to repay is lower). Hence they should
pay more for foreign loans during good times, by hedging or by indexing them to
the price of their main exports or by denominating them in domestic currency;
and they should also hedge the price of their main commodity products.

"China is in the midst of perhaps the fastest and most far-reaching
transformations seen anywhere in the past two hundred years - but doing so in a
'gradualist' way in line with the broadly dirigiste strategy of pre-1970 Japan
and pre-1990 South Korea and Taiwan; and thereby violating many current World
Bank precepts about how countries should develop. Russia and most of the Soviet
empire have followed a Big Bang strategy of full-scale integration and
privatisation (with Harvard-based American advisers and the World Bank playing
the leading role in devising and implementing the Big Bang). The result? Large
parts of the former Soviet Union are more impoverished than they were in 1989,
and the most profitable assets have fallen into the hands of economic gangsters.
In the comparison, China easily wins.

"The great danger of the state governing the market is wholesale corruption and
incompetence.A development strategy focused on building up the institutional
infrastructure of markets, investing in infrastructure on roads, schools, health
systems, and promoting the rule of law, may be about the best that can be hoped
for.

"In the longer run, building up organisational capacity outside the state is
important. 'Non-governmental organisations' can constitute a form of social
mobilisation through which governments can be made more accountable.But NGOs
tend to be single-interest and therefore politically divisive. They have to be
balanced by political parties and the state itself, organisations where
different interests can be aggregated, brought to a point of convergence,
compromises struck, priorities established.

"By and large, stronger markets need stronger states, and stronger states need
both stronger markets and stronger civil societies.The Marshall Plan's
programmes in post-war Europe recognised that redistributive flows had to be
accompanied by measures to build state capacity to manage the national economy
and regulate markets, financial markets especially.

"Concerted strategies to strengthen states, industries, and civil societies in
low income parts of the world have to be complemented by more open markets in
Europe, North America and Japan for exports from these areas; and by increases
in the flows of cheap, low cost resources from rich countries to poor, to be
invested in many sectors (like water treatment, universities) where private
financiers have no interest. Without a big push, we can expect world income
distribution to continue widening, especially between Subsaharan Africa and
parts of South Asia, on the one hand, and the rest of the world. This will
generate more global political turbulence and more economic crises - not only in
the low income world but in the rich world as well.

"It is remarkable how unconcerned are the World Bank, the IMF, and other agenda-
setting global organisations about world income inequality. The Bank' s World
Development Report for 2000 even said that rising income inequality 'should not
be seen as a negative' provided that the incomes at the bottom do not fall and
the number of people in poverty falls.

"It is striking that most of the organised opposition, as well as much of the
support, for more globalisation comes from North America, western Europe and
Oceania. Why have elites from developing countries for the most part subscribed
to the globalisation agenda that western states, businesses, and multilateral
organisations have been promoting, if a plausible case can be made that the
gains of free markets for goods and capital tend to be concentrated in the top
levels of the income distributions of their countries?...

"Part of the reason may be that elites in developing countries, like their
counterparts in the rich world, are content to believe either that world
inequality is falling, or that inequality is good because it is the source of
incentives. They, like the intergovernmental economic organisations, worry about
poverty. But they see no link between widening world income distribution and
poverty; and they think that poverty can be fixed by providing the poor with
welfare and opportunities without changing income and asset distributions or
mounting an active state industrial policy.

"The growing inequality in world income distribution is like global warming. Its
effects are diffuse and long term, and there is always something more pressing
to deal with. We don't seem to be able to rely on leadership and appeals to
humanity to generate action.

"The question is how much more unequal world income distribution can become
before the resulting political instabilities, migration flows and social
disruption reach the point of harming the rich world enough to move it to
action.

"If today's inequalities continue to increase, if social policy continues to
move in the direction of 'risk is an opportunity for individuals to profit from'
and away from 'society has a responsibility to protect individuals from certain
kinds of risks', if the operational norm of world elites continues to shift
towards 'grab what you can and the devil take the hindmost as quickly as he
can', opposition to the things called 'globalisation' will continue to spread.

"We in the rich world should mobilise our governments, the multilateral
organisations, and international NGOs - the actors who have the power to change
the norms and rules of the world economy - to establish as an overarching
priority a more equal world economic distribution, and not just, as now, fewer
people in poverty."

The realisation of the goal of a more equal world economic distribution requires
that both domestically and internationally, countries and human society as a
whole must implement comprehensive and integrated development programmes
informed by the objective mentioned by Professor Wade, in favour of the
"protection of the individual from certain kinds of risks", away from the
concept "grab what you can and the devil take the hindmost as quickly as he
can".

Without this protection from the risks that Amartya Sen described as
"unfreedoms", it will be impossible for South Africa, Africa and the rest of the
developing world to succeed in the struggle against poverty and
underdevelopment. That protection requires a conscious, determined and sustained
transfer of development resources from the rich to the poor as well as a focused
and effective use of such transferred resources to extricate the poor from the
condition of dehumanising human backwardness.

And as Professor Wade has said, "Today, resource transfers from rich countries
to poor, and downwards redistribution within poor countries (including via the
mechanisms used in the West, such as collective action by the poor and slowly
rising legal minimum wages or earned-income credits), are in the collective
interests of the rich countries as the Marshall Plan was to the United States."

Overwhelmingly, the bulk of the resources to which he refers are in the rich
countries that constitute 15 percent of the world population. Within these
countries, the development resources we are talking about, including the all
important capital, are in private hands.

Consistent with a fundamental law of the capitalist mode of production, the
capitalists who own or control these resources put them to such uses as provide
them with profit. However, the pursuit of this objective may not be consistent
with the global goal of the defeat of poverty and underdevelopment, and the
achievement of the objective of a more equitable distribution of income and
wealth.

Objectively, as we respond to the development challenge, we are obliged to focus
on two critical matters. One of these is the role of the state in development.
The other is access to the enormous resources in private hands, without which
successful development will not take place.

In its 1999/2000 World Development Report, the World Bank said: "Mutual funds,
hedge funds, pension funds, insurance companies, and other investment and asset
managers now compete with banks for national savings.Institutional investors
have taken advantage of the easing of restrictions in many industrial countries
to diversify their portfolios internationally, enlarging the pool of financial
capital potentially available to developing and transition economies. In 1995
these investors controlled $20 trillion, 20 percent of it invested abroad."

At the same time, we must bear in mind that the bulk of foreign investment flows
among the developed countries. The same World Bank Report said: "In 1997
developing countries accounted for 30 percent of the foreign direct investment
stock, or $1.04 trillion, 90 percent of which originated in industrial
countries. Five countries - Argentina, Brazil, China, Mexico, and Poland -
received half the total for developing countries."

These World Bank observations highlight three important matters:

* there are huge volumes of capital in the developed countries which the
developing countries need to access to achieve their development goals;
* this capital is in private hands and responds to market developments to seek
the most profitable opportunities; and,
* these market possibilities draw this capital to a limited number of developing
countries, partly drawn to these countries by the size of the domestic
population.

This leads to the inevitable conclusion that the majority of the developing
countries cannot rely on the market to gain adequate access to the capital
available within the world economy. Other interventions must therefore be made
to increase such access - hence the relevance of the correct call made by
Professor Wade, that "We in the rich world should mobilise our governments, the
multilateral organisations, and international NGOs - the actors who have the
power to change the norms and rules of the world economy." to effect the
resource transfers from the rich to the poor.

Consistent with this, the 1999 UNDP Human Development Report said "Pro-poor
growth is needed.An important step would be to establish an international
transfer mechanism to encourage resource flows to poor countries - through
private investment and through purposeful allocation of global revenues derived
from taxing pollution or charging for use of the global commons."

The observations made by Professor Wade and the UNDP draw attention to the
critical importance of the role of government in the struggle against poverty
and underdevelopment. In this regard, the 1997 World Development Report of the
World Bank said:

"The collapse of the Soviet Union - by then no longer an attractive model -
sounded the death knell for a developmental era. Suddenly, government failure,
including the failure of publicly owned firms, seemed everywhere glaringly
evident. Governments began to adopt policies designed to reduce the scope of the
state's intervention in the economy. States curbed their involvement in
production, prices, and trade. Market-friendly strategies took hold in large
parts of the world. The pendulum had swung from the state-dominated development
model of the 1960s and 1970s to the minimalist state of the 1980s.

"The consequences of an overzealous rejection of government have shifted
attention from the sterile debate of state versus market, to a more fundamental
crisis in state effectiveness. In some countries the crisis has led to outright
collapse of the state. In others the erosion of the state's capability has led
nongovernmental and people's organisations - civil society more broadly - to try
to take its place. In their embrace of markets and rejection of state activism,
many have wondered whether the market and civil society could ultimately
supplant the state. But the lesson of a half-century's thinking and rethinking
of the state's role in development is more nuanced. State-dominated development
has failed, but so will stateless development. Development without an effective
state is impossible."

All successful development initiatives since the Second World War confirm the
conclusion of the World Bank - that development without an effective state is
impossible. For the poor of the world, including our own, the importance of this
observation is underlined by the fact that, despite its importance, the state
does not own or control the huge volumes of capital available within the global
economy.

The "resource transfers from rich countries to poor, and downwards
redistribution within poor countries" of which Professor Wade spoke cannot and
will not happen without the intervention of the state. If the state does not
intervene, neither we nor the rest of the developing world will succeed to
achieve the objectives of the eradication of poverty, underdevelopment and the
inequitable distribution of income and wealth.

Global poverty constitutes one of the greatest challenges facing humanity. To
confront it will require the development of a strong world movement mobilised to
oblige "the governments (of the developed countries), the multilateral
organisations, and international NGOs - the actors who have the power to change
the norms and rules of the world economy - to establish as an overarching
priority a more equal world economic distribution, and not just, as now, fewer
people in poverty."

It also requires that the state everywhere, including in our country and the
rest of Africa, should discharge its responsibilities to the people, fully
understanding the observation made by the World Bank, that development without
an effective state is impossible.

Professor Wade expressed amazement that "elites from developing countries for
the most part subscribed to the globalisation agenda that western states,
businesses, and multilateral organisations have been promoting". Perhaps he
should keep in mind the Turkish proverb - he who has no bread has no authority.

Perhaps the elites that lead peoples who do not have bread believe that they
stand the greatest chance to persuade those who have authority to come to their
aid by repeating the injunctions propagated by those who have. Perhaps they
believe that, in any case, the age of revolutions is over, and that therefore
they have no choice but accommodate themselves within the globalisation agenda
set by the dominant voices in world politics and the world economy.

But a Greek proverb says - you cannot reason with a hungry belly; it has no
ears! Billions across the globe live with the reality of hungry bellies. Those
who live in the comfort of wealth and prosperity may issue appeals to the poor
to be patient because, in time, they too will enjoy lives of wealth and
prosperity. They may go beyond this to close the doors to their countries to
tell the poor of the world they should stay at home to await the arrival of a
better life for themselves.

They will have to pay attention to what Professor Wade said, that "Without a big
push, we can expect world income distribution to continue widening, especially
between Subsaharan Africa and parts of South Asia, on the one hand, and the rest
of the world. This will generate more global political turbulence and more
economic crises - not only in the low income world but in the rich world as
well."

The rich world will need to remember that it cannot reason with a hungry belly;
it has no ears! It will need to beware of the natives, whose only possession is
hungry bellies without ears! In the era of globalisation, no country is an
island.

MORE INFORMATION

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

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

III : The Truth & the Asian Miracle
http://www.anc.org.za/ancdocs/anctoday/2004/at43.htm#art1

IV: Bridging the EU development gap
http://www.anc.org.za/ancdocs/anctoday/2004/at44.htm#art1

V : The ACP and the philosophy of development
http://www.anc.org.za/ancdocs/anctoday/2004/at45.htm#art1

VI : Despair and the Washington Consensus
http://www.anc.org.za/ancdocs/anctoday/2004/at46.htm#art1

VII: Transform the Second Economy
http://www.anc.org.za/ancdocs/anctoday/2004/at47.htm#art1

----------------------------------------------------------------------

FUNCTIONING OF THE ALLIANCE <Viewpoint: Kgalema Motlanthe>

Setting the record straight

The ANC welcomes the public release of the Congress of South African Trade
Unions (COSATU) document entitled: "Assessment of the past Fourteen Months since
after the Eighth National Congress held in September 2003".

However, the document is somewhat misleading and has a number of flaws. At the
heart of these problems is that the document appears to rely entirely upon the
subjective experiences of the compilers, without any attempt to augment this
information with a broader factual background. We would therefore like to make a
number of comments focussing on what we see as distortions arising from these
failures on the part of the assessment's compilers.

Political approach to the alliance

The COSATU assessment reveals what may be at the centre of COSATU's political
approach to these matters and raises the question as to what serves as COSATU's
political point of reference in dealings with its Alliance partners.

In particular, certain Alliance partners are regarded as 'better' than others.
For example, "the work with the South African Communist Party (SACP) has rather
been better [than with the ANC]". The assessment states "even though we did not
have a formal bilateral with the Party, we do have a number of areas where we
work together. These include the ongoing financial sector transformation
campaign, the Red October campaign, . the Chris Hani Brigade, the Chris Hani
Institute etc".

With respect to the South African National Civics Organisation (SANCO) on the
other hand, it is stated that "[SANCO] has become docile and almost irrelevant".
No attempt is made to elaborate upon joint work and campaigns that have been
conducted with SANCO, as is the case with the SACP, or provide a factual
explanation to these serious allegations against an Alliance partner.

With respect to the ANC the assessment reports that "no bilateral meetings have
been held". However, it fails to inform the reader what the reason for this was
and whether the failure was as a result of ANC refusal to meet COSATU or another
reason. The factual background that should have been included is that COSATU
itself had resolved to hold a bilateral meeting with the ANC, but has never
acted on this decision by requesting such a meeting. Had they done so, the ANC
would have responded positively, as is always the case with our Alliance
partners. By failing to report this fact, the assessment creates the impression
that the ANC is unwilling to meet its alliance partners, which is patently
untrue.

Furthermore, the assessment reports that: "Some ANC members seem uncomfortable
about COSATU activists participating in ANC branches. The "yangena iCOSATU
bathini abasebenzi" to announce the arrival of COSATU activists attending ANC
meetings and activities in their own capacity as ANC cadre has been cited as a
tactic designed to stop our members from attending. This reflects two broad
problems. First, it shows that the propaganda and the 2002 Briefing Notes in
particular may have succeeded in presenting COSATU as a problematic formation
amongst ordinary ANC members, despite the Alliance with the ANC. Second, it
reflects insecurity on the part of some ANC leaders worried about their own
narrow leadership positions, who have an interest in creating hostility towards
COSATU or workers in general."

The implication of these assertions is that there are ANC members who feel as
though they are targets of isolation from other members, simply because they are
also members of COSATU. Once again the assessment makes serious allegations
regarding factional behaviour within the ANC without any reference to any facts
to support this assertion. It is unfortunate that COSATU has neglected to
provide any evidence to back-up these assertions, since the result is that a
perception amongst certain COSATU leaders about how the ANC operates is elevated
to the status of a fact, which could damage Alliance relations. Moreover, this
concern has never been raised in any alliance discussion.

The assessment also claims that "at the GDS [Growth and Development Summit] in
June 2003 [COSATU] won a major psychological victory, enforcing an agreement
that BEE must be broadly based to benefit all formerly disenfranchised black
South Africans".

Once again, the document fails to record the factual background to this
'victory', which includes the fact that at the ANC's Stellenbosch conference in
2002, it was resolved: "That Black Economic Empowerment (BEE) is a moral,
political, social and economic requirement of this country's collective future.
BEE is defined in its broadest sense as an integrated and coherent socio-
economic process located in the context of the RDP. Its benefits must be shared
across society, and impact as widely as possible."

The resolution further said that "the indicators for success are overall equity
in incomes, wealth, increasing levels of black participation -including black
women and youth - in the ownership, the extent to which there is operational
participation and control of the economy and the extent to which there has been
transfer and possession of skills and a retention of assets by the BEE
beneficiaries. To ensure that BEE is broad based, supportive of collective
ownership programmes by working people and communities, in the form of
collective enterprises and cooperatives, supportive of the creation of an
entrepreneurial class, the accumulation of assets by the poor and with a focus
on the development of rural economies."

It is the view of the ANC that government programmes are broadly supportive of
this resolution. If there is any deviation in this respect, COSATU is welcome to
raise this within the alliance.

Engagements on policy matters and joint programmes

The COSATU assessment lists a number of programmes that COSATU is participating
in jointly with the SACP in support of the contention that relations with the
SACP are good. However, the ANC is not accorded the same treatment. This is odd,
because the same document does indeed make reference, at various points, to the
substantive engagements that COSATU has had with the ANC over the last fourteen
months. These include:

* The Alliance Secretariat has met regularly with the full participation of
COSATU.
* COSATU participated fully in the process of drafting the ANC's
election manifesto and was present at the Stellenbosch conference, the
resolutions of which laid the basis for the manifesto and the programme of
government work that is now being implemented.
* A growth and development summit was held in June 2003.
* Since the elections of April 2004, a ten-a-side meeting was held at which all
the Alliance partners were present. This meeting held exhaustive discussions on
the question of South Africa's growth and development path.
* COSATU has "held 20 meetings with ANC study groups and developed
relations with them".
* COSATU held "a historic meeting with the ANC Parliamentary Political
Committee".
* At various COSATU meetings "key ministers, with whom we intend to develop
strategic relationships, addressed us".
* COSATU continues to participate in a variety of forums for social dialogue,
including National Economic Development and Labour Council (NEDLAC), the
Millennium Labour Council and the Presidential Working Group on Labour.
* COSATU, as well as its affiliates, have participated as central actors in a
number of debates regarding the implementation of government policy and
programmes. With respect to fiscal and monetary policy for instance, COSATU' s
documents states that "NUM and SACTWU in particular have played a central role
in these debates, with some success in gaining interest cuts".
* COSATU has continued to engage around the question of sectoral economic
strategies, an approach that was supported by the ANC's Stellenbosch conference.
Indeed, the COSATU document notes that: "the Presidency is beginning to engage
on the need for sector strategies".
* COSATU has engaged on the "Financial Sector Charter Council, which seems
likely to lead to substantial gains".

Added to this list we could add numerous other engagements that take place at
all levels of the Alliance, direct interactions between the ANC and various
affiliates of COSATU, and interventions made by the ANC in relation to the
public sector unions and the implementation of the manifesto.

Against this background of intensive and direct engagement at all levels of
government policy, it is difficult to understand what COSATU means when it says
that the ANC and government treat COSATU "as if we were any other NGO". Again
this raises the question of what COSATU's political point of departure is with
respect to its dealings with Alliance partners.

The Alliance Secretariat

In its document, COSATU acknowledges that the Alliance Secretariat has met
frequently, both prior to and since the elections of April 2004. In fact, since
the elections the Secretariat has met no less than twelve times. Only twice were
meetings of the Secretariat postponed, on both occasions as a result of the non-
availability of COSATU or SACP representatives.

Among the issues discussed at these regular meetings of the Secretariat over the
last fourteen months have been:

* The process of drafting the ANC's manifesto,
* the list process of the ANC and
Alliance participation in them,
* elections campaign programmes of each Alliance partner,
* analysis of the election results and the way forward,
* ten years of democracy celebrations,
* the international situation and the balance of forces,
* COSATU's fact finding mission to Zimbabwe,
* COSATU's dispute with Gallo music over publication rights to a COSATU
fundraising CD,
* the Anti-Terrorism Bill,
* the Communal Land Rights Bill,
* the Immigration Bill,
* POPCRU industrial disputes around overtime in July 2004,
* the SATAWU strike at Equity Aviation,
* the NEHAWU conference,
* COSATU's special CEC visit to Parliament,
* the outcomes of the COSATU CEC in August 2004,
* trade Relations with China,
* the South African Women in Dialogue process,
* the floor-crossing process,
* the 83rd Anniversary of the Communist Party,
* the SACP's Red October Campaign,
* issues and problems relating to SANCO,
* report on the SANCO NEC discussions,
* identification of key outstanding policy matters that should be addressed in
Alliance discussion,
* preparations and agenda for the 10-a-Side Meeting,
* the functioning of the Alliance,
* preparations for the Alliance Summit,
* a programme of Action for the Alliance for 2004.

However, COSATU expresses frustration that the Secretariat meetings "have
generally not been very productive, with little substantive debate or progress
on Summit preparations. COSATU registered its concerns in the Alliance
Secretariat regarding slow progress in preparing for, and uncertainty of, the
Alliance summit".

This statement reveals the extent to which COSATU regards the Alliance not as a
site for strategic engagement amongst comrades pursuing the common objectives of
the National Democratic Revolution (NDR). Rather, COSATU appears to regard the
Secretariat as a bargaining chamber, in which demands are made to which the
other Alliance partners must agree. Failure to agree to COSATU's demands
triggers the inevitable deployment of 'power' against either the ANC or the
government. It appears that COSATU wishes to up the ante by resorting to a media
campaign aimed at discrediting its Alliance partners, particularly the ANC and
SANCO.

Alliance Summit and Programme Of Action for 2005

The main reason that the Secretariat, in COSATU's words, has "not been very
productive" is perhaps that we, as Alliance partners, have been unable to agree
on a programme of action. This too, is the explanation for our failure to
convene an Alliance Summit, since one of the key items for the agenda of such a
summit would be the Alliance programme of action.

Indeed, COSATU was party to a press statement issued by the Alliance Secretariat
as a collective after its meeting on 1 September 2004 which addressed the
reasons for the postponement of the Alliance Summit as follows: "Amongst the
matters considered [in the Secretariat] were preparations for the Alliance
Summit, which had been scheduled for the coming weekend. The main objective of
the Alliance Summit is to agree upon a comprehensive programme of action towards
the practical realisation of the People's Contract to Create Work and Fight
Poverty. While substantial progress has been made, the Secretariat decided
further work was required to consolidate the draft programme ahead of the
Summit. For these reasons the Secretariat agreed to postpone the Summit."

The reasons for the failure of the Secretariat to agree on the programme of
action has nothing to do with lack of interest on the part of the ANC, or lack
of 'productivity' on the part of the Secretariat. Rather it is that the ANC on
the one hand, and COSATU and the SACP on the other, differ politically regarding
the one aspect of the contents of such a programme.

The programme proposes five pillars, viz:

* Coordination and Leadership to Society
* The year of the Freedom Charter
* Advancing the Agreements of the Growth and Development Summit
* Building People's Power for Local Development
* Solidarity in Africa and the World.

All Alliance partners have expressed agreement with these pillars, except for
the first. Regarding the question of 'coordination and leadership to society',
the ANC believes that the Ekurhuleni Declaration, adopted at the last Alliance
Summit, is the basis on which the Alliance should proceed. That declaration
defined the relationship between the Alliance and government policy making as
follows: "It is agreed that the strategic mandate to all our organisations in
the current phase derives from our commitment to the NDR as enshrined in the
Freedom Charter and the Strategy and Tactics documents of the ANC. Further, the
ANC governs on the basis of a broad mandate elaborated in the RDP and Election
Manifesto.

It said: "The policies and programmes of the Alliance are aimed to give
expression to these objectives. It is critical that the process of policy
development and implementation is informed on an on-going basis by this
collective endeavour. It is agreed that more consistent discussion in the
Alliance and tighter coordination is important to give effect to our common
programme of social transformation. The Summit has directed the leadership of
the Alliance to develop effective mechanisms to achieve these objectives.
Guidelines will be developed to align these policy processes in a way which
enriches, and does not impede, the decision-making processes of government."

In line with this agreement the draft programme for 2005 proposes that: "It is
critical that the process of policy development and implementation is informed
on an on-going basis by collective endeavour. Consistent discussion in the
Alliance and tighter coordination is important to give effect to our common
programme of social transformation.

"In order to provide a basis for this, as well as to ensure the implementation
of the Alliance programme as a whole and maintain the unity of purpose of the
Alliance during 2005, the following mechanisms are proposed:

* Alliance Secretariat: The Secretariat of the Alliance is composed of the
Secretary-Generals of the ANC, SACP, COSATU, SANCO. When necessary the
Secretariat will draw in participation from other organisations such as the ANC
Youth League, ANC Women's League, Young Communists' League. The Secretariat
meets every two weeks to coordinate the implementation of this programme and
address other issues that may arise from time to time. The Secretariat is also
responsible for preparing the agenda for all other Alliance meetings, at
national level.
* Alliance 10-a-Side: The most senior leadership (i.e. officials/national office
bearers) of each Alliance partner would participate in the ten-a-side. The
primary purpose of the ten-a-side is to address policy matters of importance to
the Alliance partners. The ten-a-side will meet each quarter for a full day to
consider a specific policy matter advanced by the Secretariat.
* Alliance Summit: The Alliance summit will be held toward the end of the year
in order to engage on policy issues, particularly those considered by the ten-a-
side, review the implementation of this programme and plan for 2006."
* Both COSATU and the SACP have indicated that they are not satisfied with this
formulation. In order to take the matter forward, the Secretary General of the
ANC wrote to the General Secretaries of COSATU, SANCO and the SACP on 22
November 2004 requesting that they provide a re-formulated section that could be
used as a basis for further discussion and agreement.

The ANC is of the view that the Alliance is working well, and that our Alliance
partners are making a valuable and important contribution to the policies and
programmes of the ANC, as well as the specifics of government policy. Whatever
problems have emerged, including in respect of the convening of an Alliance
summit and agreeing on an Alliance programme of action, we believe they can and
will be resolved. As stated by the Ekurhuleni Summit: "We are duty-bound by the
realities of our history, the yearning of our people for a better life and the
confidence that they have placed in the ANC and other components of the Alliance
to ensure that these qualities continue to characterise the relationship among
ourselves and our interaction with the motive forces of change, and with society
at large. In elaborating our detailed programmes of action and in managing
tensions that may arise among us from time to time, the Alliance partners
proceed from the premise that ours is a strategic political Alliance founded on
a common national democratic programme. All organisations that are part of the
Alliance accept the ANC as the leader of the Alliance."

** Kgalema Motlanthe is ANC Secretary General.

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This issue of ANC Today is available from the ANC web site at:
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