Jeremy Cronin: ‘Access’ and ‘competitiveness’ cannot be the determining factors in South
Africa’s economic transformation.

The ANC discussion document titled Economic Transformation for a National Democratic Society captures important shifts initiated by the government in recent years.

It rejects market fundamentalism, supports a developmental state, endorses the major public sector-led infrastructure investment programme and affirms the need for state-led industrial policy. There is even a commitment to open up debate on the appropriate macro-economic measures to support development.

This certainly moves away from the written-in-stone, non-negotiable enforcement of government policies back in 1996. But let us take a closer look.

First, there is a worrying defensiveness. “The ANC’s economic policy stances,” we are told, “are both comprehensive and correct, and… have remained consistent throughout the era of liberation.” Proclamations of enduring infallibility are seldom reassuring. Worse, they are liable to suppress inclinations towards critical self-review.

More substantively, at the heart of the strategic economic policy debate is a simple question: what is the economic content of the “post” in post-apartheid? There are two potential but fundamentally different answers to this question. The ANC paper flirts with both.

On the one hand is a strategic recognition that we have to place South Africa on a fundamentally new developmental path to overcome the constantly reproduced patterns of racialised underdevelopment. On the other hand, there is the strategic agenda of big capital, which also proclaims its intention to “move away from apartheid”.

That’s nice, but lest we forget, it was the mining houses in the late 19th century that pioneered and entrenched the cornerstones of segregationist policies (reserves, migrant labour, pass laws and compounds). After 1948, in the context of accelerated urbanisation and economic diversification, the implementation of apartheid helped to secure for monopoly capital a return to profitability in the new conditions. At the height of apartheid oppression, between 1963 and 1973, economic growth averaged 6% to 7%. It was the “external” oil price shock and global slowdown of 1973 rather than any “internal constraints” that brought this sustained growth to a halt.

By the late 1980s, however, the crisis of the apartheid state had indeed become an impediment to economic growth. The cost of repression and regional destabilisation escalated, sanctions began to bite, and state indebtedness mounted. In these conditions, capital in South Africa belatedly experienced white minority rule as a “market constraint” and pressed for an elite-pacted “democratic” transition.

Politically, this was a positive development. It helped to breech the walls of a relatively monolithic white ruling bloc, and it created a partial congruence of interests between the ANC and big capital at a critical turning point in the late 1980s.

But the “post-apartheid” economic policy agenda of big business is not remotely the same as the transformational agenda you will find in, for instance, the Freedom Charter. For big capital, post-apartheid economic policy was to be about “freeing up the market” through liberalisation, labour market flexibility and a greatly accelerated opening up to global markets (including greater freedom to disinvest and delist).

This agenda deliberately conflated apartheid racial regulation, state ownership and welfare provision with all state economic activism. Apartheid was presented as simply one version of a generic “social engineering”. The lesson we were meant to learn is that all public intervention in the market is oppressive and doomed to fail. Transcending apartheid became synonymous with downsizing the state — any state.

For big business, moving “beyond apartheid” has not meant the abolition of the apartheid-colonial accumulation path, but rather its perpetuation in new circumstances.

Unfortunately, this paradigm has had an impact on our movement, as is evident in several parts of the ANC policy document. “Since the democratic breakthrough of 1994,” we are told, “the ANC has sought to forge a new growth path that transcends the constraints engineered by apartheid.” Conveniently forgetting 1963-73, the ANC document boasts that “the historically unprecedented period of continuous economic growth over the last eight years points to an economy that is beginning to break free of apartheid’s limitations”, and so on.

There has been an important shift in recent years towards a more interventionist state. But this welcome shift may be less than it seems.

We run the risk of building a two-faced developmental state. On the one hand, a “first world” state, with relatively well-resourced departments and state-owned enterprises whose principal mission is to remove market constraints, lowering the cost of doing business (for business). On the other hand, a “caring” but woefully under-resourced and overwhelmed “third world” state, focused on delivery to the poor. This duality is sometimes in evidence within a single ministry, such as agriculture (for white-dominated commercial farming) and land (that is, “native”) affairs.

This way we end up with an aspirant first-world developmental state that frees the market, while a third-world “caring” state does its best to ameliorate the very underdevelopment the market constantly reproduces.

Since the late 19th century, South Africa has been a primary product exporter with an excessive reliance on capital goods imports. Our century-long accumulation trajectory has also led to what is now inaccurately referred to as a “first” and “second” economy. These are not two economies but radical inequality reproduced by a single accumulation process.

The ANC document nowhere analyses (or even recognises) the profoundly contradictory character of the world economy. It admires its breathtaking technological advances, but fails to notice its simultaneous destruction of the environment, the headlong depletion of critical non-renewable resources and the immiseration of huge parts of humanity.

Instead, we are told that all is basically fine: “SA’s private sector … operates in a globally defined terrain … [in which] the advantages are limitless.”

The document constantly imagines that “entry” and “access” are everything, and it disconnects cause from effect. For instance, it boasts that “the restructuring of the economy has resulted in higher levels of competitiveness and better access to world markets”. As an afterthought, it adds: “However, a tendency has also developed in the period since 1994 for the informalisation of jobs, casualisation and contracting out.”

This harsh restructuring of the working class is not some accidental “tendency”. It is, precisely, both a cause and effect of the vaunted “higher levels of competitiveness” and “better access to world markets”.

This is not to say that we can, or should, shut SA’s economy off from the rest of the world. But we cannot allow “access” and “competitiveness” for capital to be the key determining factors as we seek to transform the nature of our integration into the world economy.

The failure to understand systemic duality on a world scale is repeated on the national scale. Twice, for instance, the ANC document makes the ridiculous (but symptomatic) claim that: “The most significant vehicle for sharing growth would be to eliminate the second economy.” The so-called “second economy” is not some unfortunate stand-alone reality left behind by apartheid, now requiring “modernisation” — it is a direct and ongoing cause and effect of the way our so-called “first economy” functions.

The tens of thousands of taxi operators we are trying to “abolish” through scrapping, and helping to “access” the “first” economy through recapitalisation, have never been disconnected from the “first economy” of Toyota and Caltex. The fourth-largest brewer in the world has as its major domestic retail outlet tens of thousands of “second economy” shebeens. SAB-Miller is not about to abolish this “second” economy in the name of “shared growth”.

If you want to “eliminate” the “second economy,” you have to eliminate the “first economy,” or at least the ways in which it does business and accumulates profits.

In short, the challenge is to place our economy on a new developmental path. The ANC discussion document begins to dip a toe into the water, but declines to actually cross this Rubicon.

Jeremy Cronin is deputy general secretary of the South African Communist Party

Jeremy Cronin: POLOKWANE BRIEFING – 03 June 2007 11:59

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