Lost in Transformation Sampie Terreblanche

April/May 2015

1

Presented by Prof André Roux

Fundamental conclusion The political and economic sides of our dual

politico-economic system were radically changed in the first half of the 1990s

BUT

The changes that took place were the wrong ones; the new politico-economic system is operating dysfunctionally

Lost in Transformation

Basic propositions SA’s transformation process started in 1986 The “Americanisation” of the SA economy Dominant position of capitalist corporations

from 1652 to 1994 SA transformation orchestrated by minerals

energy complex ………. elite compromise The phenomenon of “unfree black labour” Intensification of poverty, unemployment

and inequality Speculation on development path until 2030

Lost in Transformation

Why was 1986 the real turning point in SA’s transformation? (ch 1)

4 events

1. Chernobyl (26 April 1986) 2. SA’s comprehensive state of emergency (12 June 1986) 3. The Comprehensive Anti-Apartheid Act of the American Congress

(Oct 1986) 4. The summit in Reykjavik between Reagan and Gorbachev (Oct

1986)

So…..

In 1986 pressure on the ANC from Moscow to seek a negotiated settlement AND pressure on SA’s white

government from Washington to do the same

Lost in Transformation

The emergence of the American-led neoliberal global empire in the 1980s (ch 2)

Late 1960s… End of post-War boom; imperial overstretch; serious social crises; four severe recessions; rising taxes; accession of China to Security Council Nixon abandoned gold standard; USA created large amounts money during the 1970s – most of it used for speculation in money markets and quick accumulation of financial assets …. Beginning of the financialisation of the global economy, which facilitated the relocation of industrial production from the West to the global South, where import substitution industrialisation (ISI) was replaced with export orientated industrialism (EOI) Fear of loss of control of flow of industrial capital led to the powerful American TNCs persuading Reagan to launch the neo-liberal counter-revolution

Lost in Transformation

The emergence of the American-led neoliberal global empire in the 1980s (ch 2)

Neo-liberal counter-revolution Beneficial to Southern countries that became industrialised with Western

support Detrimental to Southern countries that were heavily indebted, and not

supported by Western TNCs to become industrialised

Thus

A bifurcation between industrialising and non-industrialising countries in the South

Western TNCs not prepared to enter into partnership industrialisation

with heavily indebted Southern countries (although some FDI for mineral exploitation)

Structural Adjustment Programmes (SAPs)!..... Recolonisation of countries in the South!!??

Lost in Transformation

The emergence of the American-led neoliberal global empire in the 1980s (ch 2)

A bifurcation between industrialising and non-industrialising countries in the South The American-led neoliberal empire was legitimised by

Market fundamentalism Neoliberal globalism

In the event, the rise of global capitalism was not accompanied by the rise of global democracy… no global democratic government to

tame the excesses and dysfunctionalities of global capitalism/corporatism

Lost in Transformation

The emergence of the American-led neoliberal global empire in the 1980s (ch 2)

These ideologies were sold triumphantly to SA in the early-1990s The Americanisation of the SA politico-economic system during the transformation of 1994/96 was therefore based on the wrong ideological premises, on the wrong power structures, and put SA on the wrong development path

“… the criminalisation of the apartheid regime was replaced by the system of American-led global

capitalism”

Lost in Transformation

Four politico-economic systems in place in SA 1652-1994 (ch 3)

1. The period of the VOC (1652-1795) 2. British colonialism during the 19th century 3. The mineral energy complex (MEC) and various SA governments

during the first half of the 20th century 4. The MEC and the National Party government from 1948 to 1994

Throughout, the capitalist/corporatist side was much more powerful than the political side (or state)… weak states were not able to hold capitalist formations accountable for their misdeeds

and negative externalities

Lost in Transformation

SA economic growth, 1946-2014

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SARB database

The transformation of SA’s politico-economic system as orchestrated by the mineral energy complex (ch 4)

Mid-1980s: business sector realised that a transition that included the ANC was needed and inevitable… Five difficult impediments: 1. How to convince the ANC to abandon its socialist orientation. 2. How to prevent the ANC from becoming a populist government

inclined towards significant redistribution 3. How to ensure that capitalist corporations would remain in a

dominant position vis-à-vis the new political authority 4. How to convince the NP about the inevitability of a political

settlement with the ANC 5. How to interact with the black and militant trade union

movement (Cosatu was launched in 1985)

Lost in Transformation

The transformation of SA’s politico-economic system as orchestrated by the mineral energy complex (ch 4)

The MEC; secret negotiations, and the Americanisation of the SA economy Major ideological shifts in ANC’s views from 1990 to 1996 – from explicitly socialist and redistributive to an embracement of neoliberal globalism and market fundamentalism …. All kinds of “unholinesses” behind the scenes?? ANC’s acceptance of GEAR signalled the full embrace of neoliberalism The neoliberal politico-economic system was institutionalised to serve the narrow interests of the old white elite and the emerging black elite….. An elite compromise (see pp68/69; p70) The income gap between the top 20% of Africans and the poorest 50% has increased significantly since 1994

Lost in Transformation

The transformation of SA’s politico-economic system as orchestrated by the mineral energy complex (ch 4)

The MEC; secret negotiations, and the Americanisation of the SA economy AND The SA economy has been de-industrialised through SA’s obligation to implement a free-trade policy and to abolish all forms of tariff protection… labour too expensive in global terms THUS SA is now a non-industrialising Southern country, and a

relatively unattractive destination for partnership industrialisation

Lost in Transformation

The transformation of SA’s politico-economic system as orchestrated by the mineral energy complex (ch 4)

8 weaknesses of SA’s system of constitutional democracy and of the ANC government 1. Population divided ethnically and racially 2. Too powerless to address the very unequal distribution of income 3. Large parts of the population unable to make a contemplative choice

between different political parties during a general election 4. Proportional representation 5. Not enough watchdog organisations to enforce accountability 6. The elite compromise has established a very cosy relationship between

ANC government and corporate sector 7. ANC’s sovereignty is too constrained by the triple capitalist formations

with which it is confronted: the MEC capitalist formation; BEE capitalist formation; global capitalist formation

8. ANC does not have a clear idea about what constitutes the general interest/ wellbeing of the entire nation

Lost in Transformation

Affirmative action and the rapid Africanisation of bureaucracy (ch 5)

SA’s history of “unfree black labour”: slavery, indentureship, Master and Servants Acts, migrant labour systems’ influx control (dompas), labour discrimination, grow ing unemployment (since 1994) ANC 1994: serious problems at top and bottom of black labour pyramid:

Top – very small representation of black people in senior and exexutive

positions Bottom – large and growing level of unemployment

AA and EEA Large-scale cadre employment on 2nd and 3rd levels of the bureaucracy – trade-off between equality and efficiency – poverty alleviation being compromised

Lost in Transformation

The entrenchment and the intensification of SA’s social problems: poverty, unemployment and inequality (the PUI problem) (ch 6)

ANC’s policies have failed to alleviate poverty (state transfers merely help people to live from hand to mouth)

ANC’s attitude towards the poor has changed drastically over the past 20 years – from the “deserving poor” (first priority), to the “undeserving poor” (ANC elite allege that they detect in the behaviour of the poor deficiencies and moral weaknesses that make them slide into dependency, feeding off hand-outs, and doing nothing to help themselves)

Unemployment since 1994 = f(neo-liberal globalism and free-trade policies; and labour regulations)

Lost in Transformation

The entrenchment and the intensification of SA’s social problems: poverty, unemployment and inequality (the PUI problem) (ch 6)

Inequality Complex and comprehensive problem Inequality is about the undeserved poverty of the poor vis-à-vis the

undeserved wealth of the; therefore, it is about the social injustice in situations in which systemic factors enable a small minority of the population to accumulate power and wealth by exploiting a large part of the population and depriving it of property, labour power and opportunities.

In post-1994 SA…elite compromise entrenched white elitism and corporatism, while black elite has been created (through AA and BEE)

Therefore, income has become even more unequally distributed since 1994

SA is confronted with a serious poverty problem, as well as a serious opulence problem

Lost in Transformation

The fairy-tale optimism of the national Development Plan versus the likelihood that the PUI problem will be perpetuated (ch 7)

NPC targets are valuable in highlighting the many things that are wrong in SA’s politico-economic system BUT The exercise is valueless if the targets are compiled without articulating the institutional changes, and the changes in the power and property relations, that would have to be in place before the system can become functional to serve the interests of the total population, and not just the narrow class interests of capitalists and the political elite Too much trust is being put in “new story” of a virtuous cycle of expanding opportunities– p117 – too superficial, naïve, sentimental?

Lost in Transformation

Selected NDP objectives Unemployment rate from 25% to 14% by 2020 and 6% by 2030

(additional 11m jobs)

GDP to increase by a factor of 2.7 (average annual growth rate of 5.4%)

GDP per capita to increase from R50 000 in 2010 to R1110 000 in 2030 (2030 constant prices)

Proportion of national income earned by bottom 40% to rise from 6% to 10% in 2030

Export volumes to grow by 6% per annum

National savings rate to increase from 16% of GDP to 25%

Level of GFCF to rise from 17% of GDP to 30%

Lost in Transformation

The fairy-tale optimism of the national Development Plan versus the likelihood that the PUI problem will be perpetuated (ch 7)

Righting the wrongs of the past (p121) – the whole NDP seems to boil down to the government’s task to remove the obstacles to faster economic growth and building confidence

BUT ANC government is part of the problem, and cannot, therefore be part of the solution

Lost in Transformation

Too weak, myopic, corrupt to take the initiative in the planning of a developmental state; and lacks the

capacity to call the capitalist/corporatist sector to account

The fairy-tale optimism of the national Development Plan versus the likelihood that the PUI problem will be perpetuated (ch 7)

THUS Owing to the malfunctioning of the new politico-economic system there is no chance that the targets will be reached in the next 20 years – the PUI problem could be more severe in 2030 than today The “ideology of targetism” – to lull the general public (especially the impoverished majority) into contentment until 2030)

Lost in Transformation

The fairy-tale optimism of the national Development Plan versus the likelihood that the PUI problem will be perpetuated (ch 7)

Real stumbling blocks en route to solution to PUI problem? Americanisation of the SA economy Elite compromise of 1994

Is government going to de-Americanise the SA economy? Is government going to de-Africanise the bureaucracy? Is government going to hold all those corporations that enriched

themselves during the apartheid years accountable for the exploitation of “unfree” black labour?

Is government going to implement a comprehensive redistributive policy?

Lost in Transformation

Went wrong in the transformation process 1986- (ch 8)

Failure to properly address the PUI problem Post-apartheid period is in many ways as immoral and

inhumane as the apartheid period Adoption of an extravagant get-rich-quick mentality Only a small minority of the black population has

benefited from BEE Failure to create the people-centred society envisaged

by Pres Mandela in 1994 Absence of social solidarity and proud South

Africanism Domination of politico-economic system by the MEC

and other local and foreign corporations Constraints imposed by “Washington consensus”

Lost in Transformation

Went wrong in the transformation process 1986- (ch 8)

The more recalcitrant and the more myopic the small, enriched elite w ith huge

vested interest in the present dispensation becomes, the greater the

danger that the next “systemic crisis” w ill turn out to be a massive derailment of the

system, rather than an opportunity to improve it

Lost in Transformation

Thank you

REDEFINING ISMS

REDEFINING ISMS

State capitalism is an economic system in which commercial (i.e. for-profit) economic

activity is undertaken by the state, with management and organization of the means

of production in a capitalist manner, including the system of capital

accumulation, wage labour, and centralized management.

The free market tide has now receded. In its place has come state capitalism, a

system in which the state functions as the leading economic actor and uses markets primarily for political gain (Ian Bremmer)