Econ­omy is on the cusp of dis­as­ter

CityPress - - Business - Terry Bell busi­ness@ city­press. co. za

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.

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