Economy is on the cusp of disaster
Oh, when will they ever learn? It’s the last line of every verse of a famous Pete Seeger antiwar song. And it is wholly appropriate this week as we digest the latest GDP figures against the background of an ongoing crisis in the steel, mining and manufacturing sectors. Along with, of course, the continuing collapse of the rand.
Readers of this column should not be surprised at what is happening. I have consistently echoed the analysis of a number of leading international economists who analysed the real economy and looked at the facts without ideological blinkers.
As such, they recognised, years ago, that a severe and long-term crisis was coming. What most did not foresee was how the lunatic extension of credit to individuals, companies, corporations and governments would delay the onset of the crisis — and make it even worse.
Belatedly, there is some recognition, especially by government and the labour movement here, that South Africa, along with the rest of the world, may be on the cusp of a disaster. So, locally, there are emergency bilateral and trilateral meetings that appear mainly to be looking at ad hoc measures to cushion the looming blows.
Internationally, pressure from the majority groping for change has also seen the emergence of Hugo Chávez and Evo Morales in South America, the politically messy Syriza coalition in Greece, Podemos in Spain and the prospect of longtime left-winger Jeremy Corbyn becoming leader of the Labour Party in the UK.
Underlying it all is the simple fact that the world’s technological progress has outstripped the global economic and social system. This has resulted in countries entering an absurd period of overproduction and overcapacity. Automation — which could liberate humanity from drudgery — is also rapidly making jobs across the board redundant.
This is a consequence of a system based on competition and the accumulation of profit that should, ideally, be invested in order to better compete. The greedy grab of massive executive pay and bonuses is, in effect, thieving from the system – whether ownership is in private hands, is shareholder based or state controlled.
However, the mere redistribution of obscene levels of executive pay would not provide any answer either to the suffering of the unemployed and poorly paid or the wellbeing of companies. But the huge and growing wage and welfare gap is an emotional factor that provides a clear example of the fact that the system is one of us and them: sellers of labour on one side, employers on the other. But both are trapped within the system and it is in the interests of only a tiny minority of global beneficiaries that such a system should persist.
This could also, in the long term, be self-defeating: looking at all the available evidence, it appears that the only way this system can survive is by making most of humanity redundant, causing a slide, already evident in several regions, into barbarism. At the same time, the pillage and plunder of the natural environment continues, with consequences we can only guess at.
Tinkering with policies is no answer. Democratic control — possible now because of communications technology — coupled with the free flow of information, seems the only answer. In South Africa, the political framework already exists in the Bill of Rights.
How to apply it is the big question.