SA needs an action plan
• Each component of our system must be scrutinised and practical changes made to ensure growth
SA is a country of so many contrasts, it is perfectly possible to create a convincing portrait of success and prosperity since the transition to democracy. Unfortunately, it is equally possible to create a negative portrait of a country in trouble.
It is necessary to lean towards the negative perception when trying to explain the deep sense of despondency that seems to have overtaken so many people.
This is not to dismiss some of the material improvements achieved in housing, water and electricity provision for the poor, but we need to focus on understanding our crisis of political turmoil, economic stagnation and social unrest.
The 101 Stalwarts grouping has focused on ensuring a cleansing of ANC leading structures to overcome the failings within the organisation. This must go beyond moral exhortations and should deal specifically with what has gone wrong and how it can be corrected.
Furthermore, it cannot be confined to governance issues since there are fundamental problems in SA’s political economy deserving attention. Not only is our economy highly unequal, but it is structurally distorted with strong and successful sectors side by side with deeply underdeveloped sectors. This demands urgent attention.
It is often argued that a major factor in the continuing distortions in our system is the inadequate performance of the state, including the limited power of the state. The discussion about state capture has necessarily been focused on specific business interests.
However, there is a need to broaden the scope to include the role of capital generally.
State capture is not simply about enrichment of corrupt individuals, it is also about polluting institutions such as the SABC, the South African Revenue Service, Eskom and other state-owned agencies, which inhibits the proper functioning of the economy.
These malpractices have affected the performance of the economy as a whole and the government is now seen as being indecisive and ineffective. What is more, the distortions and injustices of the past are able to continue to plague the country unhindered, including the gross enrichment of the few and the devastating impoverishment of the majority.
This condition was highlighted by The Rich List survey published in the Sunday Times in December, which showed that the richest 10 South Africans owned business interests worth R240bn in 2016 (excluding fixed assets).
The top 10 earners received R292m in salaries plus R339m in bonuses in 2015 — a total of R631m. The next 10 earners got R453m, showing that the pyramid is not that steep.
Yet 1-million people live below the food poverty line of R445 a month. The unemployment rate is 35% (if we include those who have stopped looking for work).
It reached its highest level since 2004 in September 2015 with 500,000 matriculants and university graduates joining the labour force and due to job losses in mining, manufacturing and household industries.
In the poorest households only one in five people has a job. Of those who are employed, 47% (6.2-million people) earn less than R3,500 a month.
These stark inequalities represent the continuing legacy of the old order and are worsened by a lopsided and poorly performing economy.
This poor performance is attributed to the global downturn, which is undoubtedly a factor, but what is of concern is that we are performing worse than other countries in the same category, which indicates more intrinsic problems.
Growth is stagnant and lower than population growth, which means nationally, we are getting poorer every year. Moreover, since the transition, the rich, especially the superrich, have largely captured the benefits of whatever growth has been achieved.
SA’s national debt is rising fast and debt repayment costs are high. Imports cost more than export revenues, so SA depends on inflows of foreign capital to pay for imports.
Public and private investment is insufficient for employment-generation and is often directed to nonproductive and non-developmental activities.
For ordinary people, fees for state services have risen faster than private prices for most of the past 20 years — electricity rose 140%, education 90% and water 30% above the consumer price index.
The government is generally able to claim credit for building houses and providing water and electricity for the black poor, and is justified to do so. But it is remarkably easy to find negative factors that have under This mined the creation of a developmental state inclusive of all the people.
Clearly, the ANC government has fallen short in addressing these fundamental economic problems. There seems to be no short-term solution on the way as the prospects set out by Finance Minister Pravin Gordhan for the next period are a significant reduction in government spending, which will affect all departments.
The most frequent explanation for poor economic performance offered by the ANC and the government is that we are still trying to overcome the distortions of apartheid, or that we are still constrained by the compromises struck in 1994.
It must be accepted that the deal with FW de Klerk was probably the best we could get, although some argue that these distortions were dealt with inappropriately.
But what happened in the following years has to be seriously questioned.
In her Business Day column, Neva Makgetla has written that “the democratic state accepted the unaccountable, hierarchical and arbitrary power system entrenched under apartheid”.
Perhaps this was because the ANC was not prepared to take over the government and did not have the capabilities to run such a complex machine. Furthermore, the compromises imposed by the government of national unity included a continuing role for apartheid public servants in the Reserve Bank and the Treasury.
The apartheid economy was built behind protectionist walls. Did we have to move so speedily to integrate into a competitive world economy? Did we have to reduce import tariffs faster than any other country in the world, thereby allowing imports to undermine manufacturing before the country could adjust to new challenges?
Did we have to abandon the Reconstruction and Development Plan, the route to development? Did we have to impose the Growth, Employment and Redistribution plan, with its severe financial measures? Did we have to close nursing and teacher training colleges and rundown technical colleges?
CHOICES MADE
Did we have to introduce welfarism as the key measure to alleviate poverty? Was there no way we could have created jobs to increase demand in the economy as we were advised by many international and local economists? Was there really nothing we could have done to undercut the system of super-exploitation of workers? Could we not have adopted a more progressive land-reform position that did not entrench the powers of traditional leaders?
Some of the choices made during the transition and early years of rule were contrary to the basic policies set out in the Freedom Charter and in the resolutions of the 1969 Morogoro Conference. These documents asserted that seizing political power without economic power did not amount to liberation.
Our current condition is marked by several serious contradictory factors.
It is argued that we have a small tax base. But the rich list shows that the rich are creaming off huge wealth.
State employment is crucial for a developing economy. Yet is our public service of perhaps 2-million in all spheres of government the correct size? Is merit the primary criterion in appointments? Can we not do more to improve their performance and planning capabilities? Salaries and bonuses are generous, with even councillors being paid for duties that were previously done voluntarily.
The state is a necessary enabler of development. Yet state corruption is widespread and sometimes associated with the capture of critical stateowned entities.
Redistribution is needed, yet the focus of much redistributive effort has been on black economic empowerment. These deals often involve the creation of parasitic “suitcase business people”, the so-called “tenderpreneurs”. Many are not involved in the productive economy, with some doing import/ export business which undermines local manufacturing. Moreover, the black middle class remains a small proportion of the total black population.
In short, we have allowed the emergence of a system that includes corrupt crony networks siphoning off surpluses generated by the productive economy. This process has gone unchecked by virtue of paralysis in the ANC, thereby also allowing a powerful enclave of monopoly to continue reaping superprofits, as shown in the Sunday Times Rich List survey.
The traditional view in Left literature is that the role of social democratic governments, as opposed to revolutionary governments, is to maintain the capitalist system by managing dissent among the masses.
It does so partly by exercising the power of the state to control protests, but also by introducing a range of reforms to alleviate poverty and provide safety valves for political pressure.
In other words, the state exercises a degree of “relative autonomy” to distance itself in language and style from monopoly capital, yet preserving the conditions for capital to survive in a system of social democracy.
Does the continued use of terms such as the national democratic revolution and claims that the ANC remains a liberation movement — not a conventional political party — mean the objectives remain the political and economic emancipation of the masses?
It is generally agreed that the essential architecture of the economy has not changed since 1994. Ownership of the principal means of production, mines, large industry and farms has remained with the previous owning class. Nationalisation has not happened, for reasons that are well understood.
Perhaps the most disappointing part of the story is that state-owned enterprises have become a serious drain on the state’s resources and a burden on the private sector due to high administered prices — instead of acting as a mechanism to lubricate the economy.
situation leaves the government with some tough choices. Real planning with time frames should be introduced, setting out immediate measures, medium-term and long-term goals. It is essential that we rigorously identify the blockages in our economy and the waste of resources.
The enormous private wealth at the top of the tree built under apartheid clearly provides scope for substantial tax increases, especially through capital gains tax.
This revenue must be used to boost the productive sectors of the economy, particularly manufacturing. The state has a major role in achieving this, but clear mechanisms have to be spelt out. This requires rigorous analysis of value chains so that only appropriate actions are taken. Suppliers of products to industry should be induced to source locally made goods and not imports.
A systematic review of CEO and top executive remuneration is needed. The ratios are clearly contributing to inequality.
We need to reduce the legislative impediments and burdensome costs of doing business, especially for small companies. We need to review policies on import tariffs and subsidies to provide better support for our producers, while not ignoring the dangers of closing the economy.
The performance of the public service needs great improvement — productivity should be increased and salaries in the public service and political institutions should be reduced.
The ANC and all components of the democratic movement should introduce the monitoring of corrupt practices and effective countermeasures.
We need a huge skills development programme at all levels, particularly in vocational training. Only 1.12% of the working-age population is in possession of any N1 to N6 qualification, indicating a desperate deficit of technical skills.
The education system is clearly dysfunctional and not meeting the needs of the economy. The crisis in higher education needs to be resolved and the government should continue in its efforts to fund millions of students unfairly barred from university for lack of money. Basic education needs serious attention, with much better provision of all facilities.
We need to revisit what we mean by bottom-up development and people’s participation, because it is not happening. Civil society needs to be encouraged to engage in grassroots activities and local programmes.
There needs to be strong efforts to increase real economic linkages with regional partners in Africa. SA can play a vital part in the continent’s economic transformation if the right attitude and political will is developed. Integrating southern and eastern Africa into a single market with a free flow of goods and services, capital and skilled people would do much to benefit all these countries.
In the various documents and meetings of the 101 Stalwarts and the Umkhonto we Sizwe Council, there was a universal appreciation of the serious condition of the movement and the economy.
The renewal of each is dependent on the other.
What is also evident from the experiences of the rest of Africa, and indeed the world, is that a country’s performance depends as much on intangible factors as on concrete measures. Among the most important intangibles is a nation’s morale. In the country, there is instead an overwhelming despondency across all sectors — labour, business, universities and civil society — which makes efforts at renewal difficult.
The “disinfection” of the ANC, to use Joel Netshitenzhe’s phrase, is an essential element of renewal. But we also need a larger view about our entire political economy.
Perhaps it is time for a “historic compromise”, to borrow from the old Italian Communist Party, whereby all social forces — particularly the government, business and labour — agree on immediate measures to pull our economy out of the quagmire. Only thus can we hope to begin to rectify our inherited lopsided economy. We understand that the distance between the government and big business is substantial, and that big business may not be willing to make substantial concessions that would eat into their generous returns. But the crisis in the country requires just that and more.
In the struggle years, the movement correctly identified apartheid as colonialism of a special type. This was because the colonial oppressor was internal. In general, colonialism is characterised as a system that is based on political control by an alien power, and economic exploitation, naked coercion and discrimination by race or nationality, legitimated by cultural norms.
COLONIALIST FEATURES
Since 1994, political control has passed to the ANC and coercion in the form of pass laws and colour bars has been abolished, but racial discrimination and economic exploitation still have colonialist features. Race remains salient, though class relations become increasingly prominent. We seem to now need a more appropriate characterisation of our system.
Perhaps the following will meet our analytical needs: SA has a grossly unequal and unstable capitalist system with persisting colonial-type race relations under a democratic political superstructure.
Prof Turok is a veteran of the Treason Trial, prison, exile and Parliament. This is an edited version of a discussion paper prepared for “101 ANC Veterans and Stalwarts”.
THESE STARK INEQUALITIES REPRESENT THE CONTINUING LEGACY OF THE OLD ORDER WE HAVE ALLOWED A SYSTEM WHICH INCLUDES CORRUPT CRONY NETWORKS SIPHONING OFF SURPLUSES