Dis­solve cap­i­tal­ism to end state cap­ture

CityPress - - Voices - David Ma­sondo voices@city­press.co.za

The State of Cap­ture re­port, through un­con­ven­tional meth­ods, iden­ti­fies the Gup­tas as crit­i­cal busi­ness ac­tors ma­nip­u­lat­ing Pres­i­dent Ja­cob Zuma’s ad­min­is­tra­tion to ob­tain gov­ern­ment con­tracts and li­cences. Oak­bay In­vest­ments and Sa­hara Hold­ings, whose in­ter­ests range from min­ing to me­dia, are ve­hi­cles through which the Gup­tas al­lied with state of­fi­cials and politi­cians to make money. This phe­nom­e­non has el­e­vated the World Bank’s no­tion of state cap­ture in South Africa’s po­lit­i­cal lex­i­con.

The con­cept of state cap­ture sig­ni­fies in­sti­tu­tional ma­tri­ces and net­works through which elites ac­cu­mu­late wealth – legally and il­le­gally. ANN7, The New Age and the SABC tend to rally around the Gup­tas, Zuma and their al­lies’ eco­nomic agenda. The con­flict at the SA Rev­enue Ser­vice is an at­tempt by the Gup­tas’ pa­tron­age net­work to set con­di­tions for its own tax eva­sion.

The Hawks, just like the Scor­pi­ons be­fore, are used to se­lec­tively in­ves­ti­gate and fight po­lit­i­cal op­po­nents. Some se­nior of­fi­cials in state com­pa­nies such as Eskom and Transnet are ap­pointed to favourably award ten­ders to Gupta-re­lated com­pa­nies, like Tegeta.

The ex­ec­u­tive arm of the state is meant to take de­ci­sions such as the nu­clear power deal, which will ben­e­fit the Gup­tas’ Shiva ura­nium mine. Na­tional Trea­sury was sup­posed to be­come a con­duit through which bud­get al­lo­ca­tion and con­trol would serve the pri­or­i­ties of the Gupta net­work.

The cap­ture of the ANC is a pre­con­di­tion to en­able busi­ness groups to cap­ture the state. The Gup­tas are cor­rect that part of the bat­tle against them is also linked to the ANC’s 2017 lead­er­ship suc­ces­sion. Here, the Gup­tas serve as an eco­nomic fac­tion, whereas the so­called Premier League serves as a po­lit­i­cal fac­tion to de­fend the Gup­tas’ state cap­ture of other eco­nomic and po­lit­i­cal fac­tions – some of which are backed by white busi­ness.

The Gupta fam­ily wants to de­fend its po­lit­i­cal in­flu­ence in the ANC. It would ap­pear it has cap­tured a sig­nif­i­cant num­ber of na­tional ex­ec­u­tive com­mit­tee mem­bers, hence the re­luc­tance or in­abil­ity to re­call Zuma.

Other overt mech­a­nisms through which dif­fer­ent busi­ness groups, not only the Gup­tas, cap­ture the state in­clude bribery and po­lit­i­cal fund­ing. DA party fun­ders, for in­stance, are in­ter­ested in en­abling the op­po­si­tion to as­cend to state power to ad­vance their own busi­ness in­ter­ests. Th­ese overt mech­a­nisms, which can en­com­pass the no­tion of state cap­ture, only pro­vide priv­i­leged ac­cess to sec­tions of the busi­ness class – right to the cen­tre of state de­ci­sion­mak­ing. It blinds us from see­ing how busi­ness groups with­out di­rect con­tact with se­nior state of­fi­cials and politi­cians cap­ture or in­flu­ence the state.

States un­der cap­i­tal­ism are in­her­ently cap­tured by busi­ness be­cause they de­pend on the de­ci­sions of busi­ness to gen­er­ate rev­enue. Given that states do not con­trol and own sig­nif­i­cant eco­nomic as­sets, they de­pend on busi­ness to in­vest their re­sources. With­out busi­ness in­vest­ment, the state can­not gen­er­ate rev­enue from tax­a­tion in or­der to un­der­take its func­tions such as the pro­vi­sion of so­cial ser­vices, build­ing eco­nomic in­fra­struc­ture and ad­min­is­ter­ing the le­gal frame­work within which busi­ness com­petes.

Busi­nesses make cer­tain con­sid­er­a­tions be­fore they in­vest, which in­clude state poli­cies, po­ten­tial profit gen­er­a­tion and re­al­i­sa­tion, and the ex­tent to which poor peo­ple are po­lit­i­cally strong. This is re­ferred to as in­vestor con­fi­dence – a eu­phemism for profit-mak­ing con­di­tions. Rat­ings agen­cies are among other in­stru­ments busi­ness uses to as­sess whether do­ing busi­ness in a par­tic­u­lar coun­try is prof­itable.

Es­tab­lished busi­nesses such as An­glo Amer­i­can, Absa and Pan Mix­ers SA do not nec­es­sar­ily need di­rect ac­cess to politi­cians and of­fi­cials to cap­ture the state. The busi­ness class re­lies on its own­er­ship of the eco­nomic re­sources such as land, mines, banks and in­dus­try to force the state to set a con­ducive en­vi­ron­ment for its busi­ness in­ter­ests. It does not de­pend on priv­i­leged ac­cess to state of­fi­cials.

For cer­tain busi­ness ac­tors, priv­i­leged ac­cess to state man­darins and politi­cians en­hances their com­pet­i­tive­ness against other busi­ness group­ings.

If the state elite pre­sides over a de­clin­ing econ­omy char­ac­terised by un­em­ploy­ment and low state rev­enue to fi­nance so­cial ser­vices, it will lose the con­fi­dence of the elec­torate, thus run­ning the risk of los­ing elec­toral sup­port. So, it is in the ma­te­rial self-in­ter­est of the state elites for busi­ness to in­vest.

Politi­cians, re­gard­less of their ide­olo­gies, have to gen­er­ate in­vestor con­fi­dence for busi­ness to make prof­itable in­vest­ments. Of­ten, the Gup­tas are treated as a cause – and end­ing their priv­i­leged ac­cess to se­nior state of­fi­cials and politi­cians as a cure – for South Africa’s po­lit­i­cal and eco­nomic prob­lems.

It doesn’t mat­ter who will be in power af­ter the 2017 ANC con­fer­ence, busi­ness will still have un­due in­flu­ence over the state based on its con­trol of in­vest­ment de­ci­sions. The dom­i­nant post-2017 busi­ness ac­tors might be more po­lit­i­cally so­phis­ti­cated than the Gup­tas.

The im­me­di­ate fight is to ward off cor­rup­tion. But the long-term so­lu­tion to busi­ness state cap­ture is the dis­so­lu­tion of the ba­sic struc­ture of cap­i­tal­ism and its cor­re­spond­ing po­lit­i­cal in­sti­tu­tions.

Ma­sondo is a for­mer Young Com­mu­nist League chair­per­son

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