Having inherited a system which prizes the individual acquisition of wealth, will the ANC be able to 'manage' capitalism in South Africa so as to remove the obscene inequalities, poverty and joblessness that are still so pervasive, asks Ben Turok.
President Thabo Mbeki has made many speeches since the advent of democracy.
Three stand out as landmarks: "I am an African", "Two Nations", and the recent 4th Annual Nelson Mandela Lecture, on "getting rich".
This recent speech is being discussed from three perspectives: as part of a manoeuvre around the so-called succession debate, as an exercise in political ethics, and as a contribution to an analysis of capitalism.
It is understandable that in the present climate of speculation around the future presidency, first of the ANC, and then, of the country, that almost every action by a political leader is ascribed to some positioning or other of various potential candidates for either position. The problem is that all this speculation remains just that. Was the President making a negative point about the newly rich to exclude them from the race? There are no real facts to go on and we are often left with just gossip and hot air. We need to be patient and allow the process to work itself out.
We are on firmer ground with respect to ethics. This was a powerful speech made in the presence of some of the black aspirant millionaires who have joined in the race for getting rich with enthusiasm and total commitment.
Mbeki condemned the values of designer clothing, conspicuous consumption and copycat behaviour of the rich and powerful. It was not only moralising however, for he attacked the foundation of this behaviour in the market fundamentalism with its philosophy of success through capitalist acquisitiveness and indifference to the rest. Coming from an intellectual in office who has repeatedly conceded that South Africa remains a capitalist country, this was a statement of the highest significance.
What is more, although he laid out the specific background of the ANC coming to power in the context of a capitalist system of oppression and exploitation, he criticised the fact the "individual acquisition of wealth" has become the "very centre of the value system of our society as a whole".
This has displaced "the values of human solidarity" which infused the oppressed people over the previous decades if not centuries. He used some very emotive phrases to condemn this displacement of values, such as the destruction of "kinship, neighbourhood, profession and creed", people who become "atomistic and individualistic", "Get rich! Get rich! Get rich!", "designer labels", "the value system of the capitalist market", and "the most theatrical and striking public display of wealth".
He argued that "we must never allow that the market should be the principal determinant of the nature of our society. We should firmly oppose market fundamentalism". He went on to ask "whether we are not ineluctably progressing towards the situation when the centre cannot hold", "where things fall apart", and we face "the phenomenon of social conflict".
Having experienced this bombshell of denunciation of capitalism, the movement has to pick itself up and say "what now?". We have inherited a highly distorted form of capitalism with its legacy of racial inequality and concentrated economic power in white hands, and we claim to be a "liberation movement of the exploited and oppressed", indeed "a disciplined force of the Left", engaged in a "revolutionary project".
Yet, after twelve years of the ANC in power, South Africa remains one of the most divided countries in the world, with perhaps one of the highest proportions of unemployment, poverty and inequality which seem to persist despite major efforts of government to provide relief to the underprivileged either in the form of welfare grants, social wage or direct interventions.
A great deal of effort is being put into black economic empowerment (BEE) and affirmative action, which are designed to deracialise the economy, especially the commanding heights. But all this is occurring within the framework of the market economy, which means the effective exclusion of the majority of the historically exploited and oppressed.
Even these measures seem to be mere palliatives since of the 70 top earners only four are black and of the 157 most wealthy only nine are black. No doubt this is changing quite rapidly, but there is a long way to go. In any case, this process is producing exactly the kind of values Mbeki was condemning. And, just as importantly, there are few indications that the beneficiaries of this process of enrichment, and possibly some empowerment, are willing to support an attack on capitalist fundamentalism let alone capitalism as a system.
Instead we find a great deal of manipulation of the relationship between state and capital to extract as much benefit from the huge pile of state resources through the complex systems of tendering and procurement. The nasty head of crony capitalism is becoming ever more deeply entrenched as the exposures of the Auditor General and the Public Service Commission reveal (New Agenda, Issue 21, 2006).
It would seem that the movement must now call on the new middle strata to stand up and support the President in his urgent call for better values in the world of business and integrity in the public sector. There is something called "the public good" which needs constant reinforcement if it is to become the dominant value in our society.
But enough about ethics. What are the implications of the speech for the fundamental structure of our society?
Apartheid was a system of internal colonialism, characterised by the domination and exploitation of black people by white capital and the state, and serving the interests of white capital and whites generally. The allegiance of the white working class was obtained by means of special privileges of income and status. This means that an analysis of the role of the ANC must be based on a political economy approach, which embraces race and class concepts, and not simply on the system of race discrimination and oppression. One very important dimension is that the negotiated settlement in the Convention for a Democratic South Africa (Codesa) left the economy in the control of the white minority.
Nevertheless, the establishment of the democratic state in which the ANC became the ruling party led to a total restructuring of political structures, including the steady increase of the presence and power of progressive forces in the diverse institutions of the state, as well as substantial shifts within the social order. Due to the opening of economic space, many blacks swelled the ranks of the middle strata and some rose into the ranks of the bourgeoisie and capitalist class.
A prospect has emerged of some unity in action of black and white workers on class issues, as in the miners strike in August 2005 where black and white unions struck jointly against the combined power of the gold mines. But the ANC has always had its base in the African working class and the poor masses and they remain the major component of the motive forces for change. The black middle strata also continue to be an important component of the national movement, as well as some elements of black business, although they are not equally articulate on the class interests of the poor.
The small number of blacks who managed to enter the ranks of the bourgeoisie proper can be divided into business people, top corporate managers, and public sector corporate managers. Their ascent has the effect of beginning to deracialise the exercise of economic power. But independent black capitalists are still relatively few.
There is clearly an effort by white capital to provide some space for black capital: a process which is encouraged by the policy of affirmative action and BEE, whereby the state provides substantial support to black business through tenders and procurement and the allocation of share capital in state-owned enterprises (New Agenda, Issue 22, 2006).
A major question arises as to whether this new black bourgeoisie and in particular its business components will advance the interests of the masses, or whether some components will become junior partners of white capital, which has become increasingly integrated into global capital. Alternatively, as it gains in strength, will black business develop its own identity as the core of a national bourgeoisie promoting progressive policies domestically and internationally?
The experience of decolonisation in most post-independence African countries is that colonial capital and the colonial state managed to create a comprador neocolonial class that abandoned the social and economic objectives of the national liberation movement. Will the same happen in South Africa? Or will the power of the ANC as a national movement continue to embrace all, or most, black people, irrespective of class location in the cause of overcoming white domination and establishing a non-racial democratic order which reduces the inherited inequalities and provides a decent life for all? That was at the heart of Mbeki's speech.
In other words, will the ANC be able to sustain its character as a "disciplined force of the Left" with the primary motive force "the working class and the poor generally"? (Resolution of the ANC National General Council, 30 June 2005) Can this position be sustained within a capitalist economy? Especially one that is integrated into the world capitalist economy and subject to the same polarisation effects.
Much depends on the conduct of the ANC itself. Mbeki made an unusually strong critical statement on this subject at the National General Council (NGC) on 3 July 2005: "Our historic victory has put our movement into a position of political power. Since 1994, the 82nd year of the existence of our movement, our people have mandated us to assume the position of a ruling party. To be a ruling party means that we have access to state resources. It means that those who want to do business with the state have to interact with those who control state power, the members of our movement who serve in government."
"It means that those of us who serve in the organs of state have the possibility to dispense patronage. It therefore means that we have the possibility to purchase adherents, with no regard to the principles that are fundamental to the very nature of the African National Congress. All this makes control of state power a valuable asset. It makes membership of the ANC an easy route of access to state power. It makes membership of the ANC an attractive commercial proposition. It makes financial support for the ANC an investment for some of those who want to generate profits for themselves by doing business with government."
But whatever the prospects of potential distortion within the state system, there are other important dynamics in the socioeconomic system as a whole.
The disturbing feature of the present scenario is that with a Gini coefficient at 0.70, income inequalities remain the same, or even higher, as under apartheid when the Gini coefficient was 0.6 (1993). This means that the same degree of surplus extraction and/or economic exploitation of the masses remains in place (Turok 2005a).
Over the past ten years directors' fees have increased at an average rate of 29%, non-executive directors (where many blacks are now appointed) by 49%, while workers increased their incomes by 6.5% (Labour Research Service annual report 2004). Also, the conspicuous consumption of the black bourgeoisie indicates a strong propinquity to enjoy the same fruits as their white counterparts. There has been an "increase in black affluence - 41% of the affluent are now Africans" (Burger) while 60% of the middle class is now black (Hirsch).
Blacks are clearly joining the white elite, which is one of the wealthiest in the world. South Africa had 690 "ultra-high-gross-worth individuals in 2002 with assets totalling $30 million each. There are 25,000 dollar millionaires living in South Africa with $300 billion in private wealth.
Interestingly, the super-rich, people worth more than R200 million, has grown fourfold since 1994." (World Wealth Report 2003 and VIP Forum quoted in the Sunday Times, 9 May 2004).
A PROGRESSIVE BLACK BUSINESS CLASS?
The case for encouraging the emergence of a black business class is compelling. Under apartheid, blacks were denied any scope for capital accumulation by a maze of restrictive legislation, a lack of skills and education, no access to loans and job reservation for skilled whites. It is therefore logical that a national liberation movement should insist that space be created for black capitalists in the interests of deracialising the economy. Also, many of the leading personalities in black business were leading figures in the ANC and retain those links. The problem is that they come empty handed onto the field, they are "capitalists without capital".
After eight years of effort, black business had only captured between 1 and 4% of the shares on the Johannesburg Stock Exchange (Southall 2005, p 461).
Nevertheless, this data hardly accords with the indications that a group of business people have amassed very substantial assets through a vigorous drive to acquire shareholdings in large companies. If they were to realise these assets they would have substantial funds in their bank accounts. On the other hand, white capital has always held a dominant position in the economy - in the 1980s six corporations controlled 70% of the total assets of non-state corporations, and this has changed little. Except that these same corporations now have an external reach that was not possible under apartheid. Five major corporations, Billiton, South African Breweries, Anglo American, Old Mutual and Dimension Data have moved their primary listings from Johannesburg to the London Stock Exchange. This has rendered their domestic assets now wholly or partly-owned subsidiaries of foreign companies (Southall 2005, p 460).
The case against the emergence of a strong black business class within the present system is that the economic legacy of colonial capitalism, rooted internally, remains in place. This system enabled white capital to gain enormous wealth and power through the extra-economic super-exploitation of forced cheap labour. Although the forced aspect of the system has gone, it remains extremely difficult to transform this system, and the economic and social dualism of the past remains structurally intact. Black business is operating within these structures and clearly benefits from the inherited capital-labour distortions.
One of the inescapable consequences is that black managers are paid the same financial rewards as their white counterparts, and sometimes a premium above the market rate, thereby expanding the size of the highly privileged bourgeoisie considerably. They are clearly part of the bourgeoisie by virtue of their location in the system of ownership and control of the means of production and by their incomes and lifestyle. They are therefore indirect beneficiaries of the economic dimensions of the apartheid legacy.
We have used the term 'class' with some reservations. Classes are large groups of people distinguished by their location in a system of social production, and by their relation to the means of production. The evidence suggests that black business is still too small a group to be a class-in-itself or a class-for-itself, despite vigorous aspirations. Mbeki has actually criticised them for having become nothing more than rentier capitalists [who live off investment dividends but contribute little to productivity] (Southall 2003 p12).
Some argue that the present process is intrinsic to capitalism. On the other hand, others believe that it may be possible to continue with deracialising the economy without the creation of an affluent black business class distinguished by conspicuous consumption and wealth accumulation through non-productive means. Some measures suggested are: prevention of the abuse of state procurement, control of offloading shares in state enterprises, limits on funding by the National Empowerment Fund, and a requirement of commitments to social investment.
Black business has three options:
There are possibilities of some overlap on these options. Much depends on how black business sees its own role. Many articulate an entitlement ideology demanding the same opportunities as white capital: "If the whites can do it so can blacks." But this ignores the fact that white capital was based on super-exploitation and national oppression, and mimicking their status deprives the black bourgeoisie of legitimacy and any scope for a progressive role.
Although the private sector is large in South Africa, seemingly offering ample scope for entry by a dynamic group of black entrepreneurs, the leap to capitalist status is not easy. Most start by deal making to get a foot on the ladder of wealth accumulation. They are assisted by the openings offered by white business and by the black economic empowerment policies of the state. The latter is becoming an increasingly powerful weapon as many large firms fear that those who do not make the necessary transition to empowerment may endanger their own sustainability. They fear that they will not get their customary share of government procurement, and that even the private banks may decline lending. "Banks and other institutions will need to consider the risk of non-repayment when borrowers are not empowered."
(Business Day Survey, May 2005) A special report in Time magazine (6 June 2005) called 'The New Rand Lords -Capitalists or Cronies?' states that there are now 100,000 whites earning $60,000 annually, but only 5,000 blacks. However in the past three years 300,000 blacks became middle-income earners (between $13,000 and $23,000 annually). This is because blacks have been promoted vigorously in state institutions and because private companies must be seen to comply with training blacks and appointing them to management positions if they wish to benefit from government contracts. According to Time magazine "the biggest companies offered to sell or grant equity stakes on favourable terms, often financed by the companies themselves, in return for connections, expertise and links to the black marketplace". However some of the new black business people assert that "none of the new black elite control any independent capital". The problem with this strategy is that most of the individuals involved land up in heavy debt since they have no capital to enter into these deals. Also, some become non-executive directors to collect fees, but have no real power to influence the companies as they are excluded from the inner circle running the companies.
However, notwithstanding the obstacles to capital accumulation, the mindset of enrichment and profit-making is growing rapidly, as Mbeki said. Even in the parastatal system profit is sometimes primary. Telkom CEO Sizwe Nxasana was perhaps more brazen than most when he said, "We are not apologetic about our profits, I'm in the business of making money; after all, we live in a capitalist society... It used to be acceptable that the white population made money. Are you now suggesting that black companies should be socialist while the rest of the world is capitalist?" (Mail & Guardian, 10 June 2005)
In the present mood that making money is a good thing, many political personalities with impeccable political credentials have moved into the private sector, followed by top public servants. They naturally retain their former political and family connections and clearly benefit from these associations in their new business roles (for details see Southall 2005 p475). Roger Southall comments: "The point about these connections is not, that they indicate corruption. However, what they do suggest is the fluidity, overlapping and intimacy of South Africa's black elite, which is still relatively small, amongst whom linkages across political, state and business boundaries provide a constant flow of exchanges and illuminate a sense of community." (Ibid, p476)
Whether this constitutes a basis for the emergence of 'crony capitalism' is still a subject for speculation. Certainly there are many instances of the use of opportunities provided by the state for accumulation in the private sector. The more important issue is whether the emergent business class is capable of becoming a dynamic productive capitalist class or whether it will be more akin to the state-dependent and kleptocratic class of post-independence Africa driven more by conspicuous consumption than by a culture of hard work and productive effort. Mbeki recently warned that "independent Africa has provided some of the worst global examples of the gross abuse of state power to enrich elites that control the levers of state power". (Speech in Parliament, 25 May 2005)
The ANC's liberation strategy was based on an intersection of race and class forces that meant a combination of nationalist and class forces. It was argued that the working class was the most organised and determined with the most to gain and was therefore the leading force. The Congress of South African Trade Unions (Cosatu) now argues that the working class has lost representation in the decision-making institutions of the ANC and has therefore lost much space to remain the leading force in the movement.
Furthermore, the economy has remained capitalist with some of the main features of the past, namely the dual economy, and huge inherited inequalities. Many sections of the employed have improved their conditions and the social wage has increased substantially, but class contradictions and exploitation continue despite the removal of repressive labour legislation.
The dual economy structure is typical of colonial and post-colonial societies. In the "second economy" we find the poorest of the poor and marginalised people of such societies. Some of the workers in the formal economy are also among the poor.
However, to get a more balanced perspective, we have to compare the tasks facing the ANC during the struggle years to the many conflicting responsibilities facing it now:
A recent document states that "the ANC should aim to contribute to the restructuring of international relations in the interests of the poor" (Preface to Strategy and Tactics p25).
THE MOTIVE FORCES
The complexity of these tasks has led to a debate about the nature of the motive forces in the present period. This debate must be seen in the context of how the ANC sees the character of the National Democratic Revolution (NDR): "The strategic objective of the NDR is the creation of a united, non-racial, non-sexist and democratic society. This, in essence, means the liberation of Africans in particular and Black people in general from political and economic bondage." (Strategy and Tactics, December 2002, p30)
It also refers to the "elimination of apartheid property relations", "the deracialisation of ownership and control of wealth, including land" and "the elimination of the legacy of apartheid super-exploitation and inequality, and the redistribution of wealth and income to benefit society as a whole, especially the poor."
To advance these objectives, the ANC has identified the motive forces as follows: "the black masses, those classes and strata that objectively and systematically stand to gain from the victory and consolidation of the NDR.
It identifies the working class and the poor - in both rural and urban areas - as the core of these forces... These motive forces include the black, emergent capitalist class whose interests are served not only by the formal democracy, but also by the programme to change apartheid property relations... At the same time, the ANC needs to win over...all other sections of South African society, including the white workers, the middle strata and the bourgeoisie."
At the same time it is acknowledged that these measures "will not eliminate the basic contradiction between capital and labour... Nor eradicate the disparate and sometimes contradictory interests that some of the motive forces of the NDR pursue. These secondary contradictions... must be properly managed." (The word secondary may be challenged.)
Finally, there is a stark warning about the new social forces: "[T]he rising black bourgeoisie and middle strata are objectively important motive forces of transformation whose interests coincide with at least the immediate interests of the majority." But some "are dictated to by foreign or local big capital on whom they rely for their advancement... without vigilance, elements of these new capitalist classes can become witting or unwitting tools of monopoly interests, or parasites who thrive on corruption in public office... Examples abound in many former colonies of massive disparities in the distribution of wealth and income between the new elite and the mass of the people."
This implies that we must distinguish between the primary motive forces, their social base, the expected allies, the neutralised forces and the enemy forces. The motive forces therefore consist of:
Perhaps the most elusive category at present is the black middle class. Many are located in the state apparatuses and steadily moving up the ladder with much blurring at the edges. Southall (2005) states that 29% of the middle class was African in 1994 while the figure for 2000 was around 50%. By 2005 the figure must be much higher. This category may be the primary beneficiaries of ANC rule.
Black personnel are now predominant throughout the top levels of the state system. This is most pronounced in government departments, with black women now also moving into top posts. But it is also highly visible in the parastatal system, which is now mostly in black control. Six of the nine directors on the development finance Industrial Development Corporation (IDC), 12 of 23 directors of defence industry Denel, 11 out of 15 directors of Eskom Holdings, and 9 out of 12 of electricity Eskom Enterprises are black. The same goes for Transnet, Telkom and SA Airways. These 15 state-owned enterprises deployed assets of R291bn in 2003. If we add the Public Investment Corporation (R450bn), this constitutes a massive presence in the economy. Interestingly, many of these directors have positions on the boards of private companies, creating an intricate web of cross influence (Southall 2005 p462).
However, a recent survey showed that black business has yet to enter the arena of manufacturing. There were 24 transactions in resources worth 58.3% of the total deal, while in manufacturing there were 13 deals worth 1.3% of the total deal. In basic industries there were two deals worth almost zero of the total (Ernst and Young).
The key issue is whether the black business class is capable of playing the kind of role that similar groups have played in other developing countries.
This includes promoting an economic strategy that boosts internal demand, promotes domestic industrial capacity and combines employment growth with redistribution (Southall 2005c). There are few indications that South Africa's black business class has lined up behind such policies.
To conclude, we return to a comparison of the role of the domestic bourgeoisie in post-independence Africa and the situation in post-apartheid South Africa. In both cases, a sizable local bourgeois class emerged within a decade of liberation. However, in the rest of Africa, this class was a creation of departing colonial powers that sought to maintain their economic power by indirect means in a system of neocolonialism. In other words, they were intrinsically comprador and parasitic. By contrast, in South Africa apartheid resisted the emergence of a black bourgeoisie till the very end.
Hence, apart from some artificial measures in the bantustans, no comprador class was in existence in 1994.
This is a vital difference, which enabled the ANC to mobilise across a broad front of actual and aspirant classes and maintain the unity of the oppressed. This was one of the major consequences of a system of internal colonialism compared to the more usual colonial rule.
But the situation is changing rapidly. Now that the mechanisms of internal colonialism have been broken by the removal of white political rule, the abolition of the pass laws and the many laws of discrimination, a more "normal" capitalist system is emerging, with all the contradictions of class becoming visible. However this "normal" capitalism still faces a social structure rooted in the previous system of colonialism and underdevelopment.
Our remedial measures are unlikely to be similar to those of developed "normal" capitalism. Can the ANC government regulate our capitalism so that all benefit? Will the ANC be able to "manage" the system so that we remove the obscene inequalities, poverty and joblessness that are still so pervasive? Mbeki's warning about the consequences of things falling apart is highly relevant.
* Ben Turok is an ANC Member of Parliament.
References
2005 African National Congress, "Strategy and Tactics", National General Council Resource Pack Volume One, 29 June-3 July 2005.
2004 Ernst & Young. Data supplied in answer to Parliamentary Question no 951, 2004.
2004 Alan Hirsch. Paper for Conference "Overcoming Underdevelopment in SA's Second Economy" Pretoria November 2004.
2004 R Burger, S van der Berg, "Emergent Black Affluence and Social Mobility in Post-Apartheid South Africa". Development Policy Research Unit, University of Cape Town.
2004 Roger Southall "The ANC and Black Capitalism in South Africa". Review of Africa Political Economy No 100:313-328.
2005a Roger Southall "Black Empowerment and Corporate Capital" in J Daniel, R Southall, and J Lutchman, State of the Nation, South Africa 2004-5, HSRC Press.
2005b Roger Southall "Political Change and the Black Middle Class in Democratic South Africa". Mimeo.
2005c Roger Southall "Can South Africa be a Developmental State" Mimeo.
2006 New Agenda, S A Journal of Social and Economic Policy, Nos 21 and 22.
2005a Ben Turok "Promoting Production in the Second Economy" . New Agenda, SA Journal of Social and Economic Policy, No 18 2005.
2005b Turok. "The Congress of the People, 1955". New Agenda, SA Journal of Social and Economic Policy. No 18 2005.
1999 Ben Turok "Beyond the Miracle. Development and Economy in South Africa". University of Western Cape.
1993 Ben Turok "Development and Reconstruction in South Africa" Institute For African Alternatives. South Africa.
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