Cry for the Beloved Country - (pt 2 of 6)

Hinrich Kuhls kls at
Fri Jan 19 14:39:24 MST 2001

---------- Forwarded message ----------
Date: Sun, 14 Jan 2001 14:41:14 -0500 (EST)
From: John Saul <johnsaul at
Subject: MR article (pt 2 of 6)


This defeat was no accident. As anticipated above, from the mid-1980s the
cooler heads in the camp of capital had begun to develop a counter-
revolutionary strategy designed to shape the socio-economic transition that
would now parallel the political one. The trigger: the near revolutionary
mobilization of popular forces against the established system that marked
the 1980s. Faced with so serious a political crisis, Anglo-American
business executive Zac De Beer enunciated his classic warning (Financial
Times, 10/6/1986) that "years of apartheid had caused many blacks to reject
the economic as well as the political system." His corollary: "We dare not
allow the baby of free enterprise to be thrown out with the bathwater of
apartheid." Armed with this sensibility, capitalists, both world-wide and
local, prepared themselves to sever the marriage between the structures of
capitalist exploitation on the one hand and of racial oppression on the
other that had proven to be so profitable to it in the past. Indeed,
increased interaction with Nelson Mandela in prison and Thabo Mbeki and
others in exile merely helped to confirm the growing sense that the ANC
might be potential participant in (and even possibly the best guarantor of)
a transition that safeguarded the essentials of the established economic
system. The fact that a powerful stratum of Afrikaner capitalists had by
now joined the upper echelons of South Africa's business community was also
important here.

This group increasingly became protagonists within the National Party for
reformist strategies for a deracialization of capitalism that began to
jettison the interests of those Afrikaners -- less well-off and most
vulnerable to colour-blind competition for jobs and other privileges -- who
had once formed its chief political base. The fact that, as seen, de Klerk
held out until quite late in the day for more firm guarantees of continuing
racially-defined privilege proved to be much less important to the outcome
of negotiations than this underlying pull on the part of capital towards
the granting of extensive concessions on the racial-cum- political front.(13)

Intriguingly, this preemptive strategy was twinned to the saliency of a
related perspective on the crisis the late-apartheid economy was deemed to
be confronting, a perspective that served further to underscore the need
for "reform." For South African capitalism was increasingly viewed not only
as prisoner of an outmoded (and increasingly politically dangerous) racial
ideology but of an outmoded economic strategy as well: in an ever more
neo-liberal age, the racially motivated interventions of the South Africa
state were merely one way in which that state was now deemed to be unduly
intrusive into the sacrosanct domain of the market and therefore a drag on
economic progress. Thus, in its last years, the NP government itself had
moved a long way towards the embrace of neo-liberal orthodoxy, a trend most
clearly manifested in the centrality of "privatization, trade
liberalization, spending cuts and strict monetary discipline" to the
Normative Economic Model (NEM) that it released in 1993. But, as has
already been suggested, the most significant conversion to such orthodoxy
was to take place, under intense pressure from the world of capital, within
the ANC itself.

There were some counter-tendencies to this outcome. True, many within the
ANC were caught flat-footed in the sphere of economic policy in 1990, with
only some vague if progressive nostrums from the Freedom Charter ("The
mineral wealth beneath the soil, the banks and monopoly industry shall be
transferred to the ownership of the people as a whole") to fall back upon.
Perhaps it was this that allowed Nelson Mandela to state militantly
immediately upon his February 1990 release from prison that "the
nationalization of the mines, banks and monopoly industry is the policy of
the ANC and a change or modification of our views in this regard is
inconceivable" -- a position Mandela himself would soon so distance himself
from that by 1994 he could tell the US Joint Houses of Congress that the
free market was a "magical elixir" that would produce freedom and equality
for all!(14) But even if Mandela himself was not to be counted upon in this
respect, there was also available a more considered expression within the
ANC of a radical sensibility relevant to thinking about the macroeconomic
sphere -- one grounded, for example, in early position papers developed by
the Research Department (with the assistance of such figures as British
Marxist economist Lawrence Harris), amongst other sources. This sensibility
produced chiefly a kind of dirigiste neo-Keynesianism perhaps, but it
nonetheless contained the possible seeds of a deepening challenge to
capital's prerogatives in favor of a prioritization of popular needs in the
sphere of production. Its impact was best exemplified by the then
prominence of the proposed guideline "growth through redistribution" in ANC

This perspective also found early voice in the ANC's new Department of
Economic Policy (DEP), in its very first major policy pronouncement (the
"Discussion document on economic policy" of 1990) in fact: "The engine of
growth in the economy of a developing, non-racial and non- sexist South
Africa should be the growing satisfaction of the basic needs of the
impoverished and deprived majority of our people. We thus call for a
programme of Growth through Redistribution in which redistribution acts as
a spur to growth and in which the fruits of growth are redistributed to
satisfy basic needs." Such emphases were reinforced by the report of the
Macro Economic Research Group (MERG) crafted, between 1991 and 1993, by ANC
aligned economists working with progressive counterparts from overseas. And
it found significant public expression in such claims as that made in 1992
by then-DEP economist (and presently governor of the Reserve Bank), Tito
Mboweni: "the ANC believes that a strategy of 'growth through
redistribution' will be the appropriate new path for the South African
economy....In our growth path, accumulation depends on the prior
redistribution of resources.
Major changes will have to take place in existing power relations as a
necessary condition for this new growth path."(15) This logic appeared
momentarily compelling. After all, the vast majority of South Africans were
(and still are) desperate in their poverty for a wide range of the simplest
goods and services on the one hand and a very large percentage of people
(most often the same people) were (and still are) equally desperate for
jobs, on the other. Why, the ANC seemed poised to ask, cant those two key
pieces at the center of the South African economic puzzle simply be put
together? Why must they be joined so indirectly and inefficiently through
the circuits of global capital and the process of generating surplus value
(profits) for those few who have the power to dictate terms and guarantee
their massive cut of the action? But any such questions were very soon lost
from view as Mboweni and other young ANC high-flyers -- in a rightward
shift which was also congruent with that being made, alongside Mandela
himself, by older heavyweights like Joe Slovo and Mac Maharaj --
increasingly looked elsewhere for economic cues.

For the voices raised against anything like the "growth through
redistribution" model were ferocious, with attack dogs for capital like the
notorious business economist Terence Moll quickly labeling it
"macro-economic populism" and "a dangerous fantasy."(16) Moreover, a wave
of much more capital-friendly scenarios (the Mont Fleur proposals , for
example, and the recommendations of both the Nedcor/Old Mutual
"Professional Economists' Panel" [entitled Prospects for a Successful
Transition] and insurance conglomerate Sanlam's own Platform for
Investment(17) soon washed over the macroeconomic debate -- even as other
global players "arranged for key ANC economic advisers and politicians to
receive training at business schools and international banks and investment
houses in the west where they were fed a steady diet of neo-liberal
economics."(18) As DEP economist Viv McMenamin put the point frankly at the
time, ANC economic thinking now registered "a shift away from policies that
may be morally and politically correct, but which will cause strong adverse
reaction from powerful local and international interests."(19) Ironically,
even the chief trade union central, COSATU, that would eventually prove a
rather sharper critic of burgeoning neo-liberalism in South Africa found
itself wrong-footed in this early going. Thus, its own team of academic
advisors (the Economic Trends Group, the Industrial Strategy Group) began
by advocating various interventionist measures vis--vis capital but soon
found itself so taken with models of "shaped" and "competitive" advantage
and with supply-side and external-market driven preoccupations as to offer
advice that fit quite comfortably within the rising tide of orthodoxy. In
the end, ex-United Democratic Front (UDF) activist Trevor Manuel,
instrumental in pulling the DEP to the right in the early 1990s, and ex-
trade union militant Alec Erwin, patron of the COSATU academics, would
become, as Ministers of Finance and of Trade and Industry respectively, the
principle protagonists of the global conformism that had come to
characterize ANC economic policy at the turn of the century.(20)

One last throw of the dice by the left within the Mass Democratic Movement
was the document that became, in effect, the electoral manifesto for the
ANC in the 1994 election campaign, the Reconstruction and Development
Programme (RDP). To a considerable degree driven from below by the trade
unions and civic organizations and adopted only rather more
opportunistically by the core group of ANC senior leaders it emphasized the
centrality to the planning process of both the meeting of the populace's
basic needs and the active empowerment of that populace in driving its own
development process. Nonetheless, the central chapters on macro-economic
policy were already markedly compromised in the direction of free market
premises, the document as a whole being at best (as I wrote at the time)
"less what it is, than what it might become" in the context of further
class struggles. Unfortunately, it was the rightward pull that proved
predominant, reinforced (as Asghar Adelzadeh has carefully recorded) in a
range of government documents, each more neo-liberal in tone and substance
than the last, that ran from the RDP White Paper of September, 1994,
through the draft National Growth and Development Strategy of February,
1996, to the "Growth, Employment and Redistribution, a Macroeconomic
Strategy" document of June, 1996.(21) As Marais notes of the latter (p.
171), "Rhetorically, attempts were made to align [GEAR] with the socially
progressive objectives of the RDP. But the central pillars of the strategy
were fashioned in accordance with standard neo-liberal principles --
deficit reduction, keeping inflation in single digits, trade
liberalization, privatization, tax cuts and holidays, phasing out of
exchange controls, etc." And in March that same year the RDP Office, until
then strategically located in the President's Office as cabinet level
overseer of what was left of a popularly-driven development mandate, was
closed, its activities folded, ostensibly, into the various line ministries.

For many of the government's most sympathetic critics it is the extreme,
precipitate and unqualified nature of the ANC government's move towards a
neo-liberal strategy that is so surprising. As Adelzadeh suggests, what has
transpired appears to be in significant part a self- inflicted wound, an
"adoption of the essential tenets and policy recommendations of the
neo-liberal framework advocated by the IMF in its structural adjustment
programs" which is

all the more remarkable in view of the limited, even negative impact of
such programs, especially in southern Africa, the lack of any leverage that
the international financial institutions such as the IMF and World Bank
have over South African policymakers, the lack of any dramatic shifts in
economic and political environment to warrant such major shifts in policy
orientation, and the lack of a transparent and fully argued justification
for the adoption of an entirely different policy framework.

[FLUSH] What there is, Adelzadeh concludes, is merely "a lame succumbing to
the policy dictates and ideological pressures of the international
financial institutions."(22) Moreover, the pronouncements of these
documents have been paralleled by a range of concrete policies that
epitomize just such a "lame succumbing." Crucial in the constitutional
negotiations per se -- alongside the property rights clause -- was the
agreement to guarantee formally the "independence" of the Reserve Bank, a
reassurance to capital that removed from government hands any real leverage
(especially in facilitating expansionary policies) over crucial monetary
decisions. Moreover, as a member of the caretaker South African government,
the Transitional Executive Council, the ANC spent most of 1993 signing on
as party to a range of decisions that firmly cast the die for future
policies once it was in power: inking an extraordinarily market-friendly
letter of intent to the IMF in order to guarantee a balance-of-payments
loan, for example, and joining the General Agreement on Tariffs and Trade
(GATT). Perhaps the most noteworthy aspect of this latter move was the fact
that it set the stage, after 1994, for the ANC government to remove tariffs
in key areas much faster than even GATT required -- with catastrophic
effects on many local firms. Moreover, Bond argues that the same kind of
"moral surrender" to the market was evident in an on-going propensity to
cut back corporate taxation and in such decisions as those "to repay in
full apartheid's $20 billion-plus foreign commercial bank debt and to phase
out exchange controls in the name of attracting new foreign finance."(23)

These, and a number of other choices made in the early going, were crucial
ones, rendering cumulatively more difficult and more unlikely any opting
for the plausible alternative policies that existed at the outset of the
transition. Left critics would argue that many of the ANC's more recent
claims to be powerless in the face of the marketplace have a disingenuous
ring when measured against the fact that the movement itself had, early in
the game, thrown away so many of the instruments that might have been
useful in crafting a more assertive strategy towards capital.(24) Instead,
and ironically, the ANC has come, full circle, back to the late apartheid
government's Normative Economic Model. For the central premise of South
Africa's economic policy now could scarcely be clearer: ask not what
capital can do for South Africa but what South Africa can do for capital:
an overwhelming preoccupation with foreign investment, an (at best) trickle
down approach to development more broadly conceived, and an attendant
encouragement of a culture of stock markets (with even many trade unions
becoming substantial players in the game through their own investment
companies) and, for more marginal players, of institutionalized lotteries
and other games of chance. All in a context where a sophisticated case can
and has been made against the continued prioritizing of supply-side
economics and for an approach ("growth through redistribution"?) that
highlights the far more central brake on economic growth that exists on the
demand side of the equation.(25)

In light of such circumstances it is difficult not to feel, with Adelzadeh,
that the option for neo-liberalism was, first and foremost, an ideological
one. For in strictly economic terms the underlying premises of this
wholesale capitulation to the market have been desperately shaky. As Colin
Leys and I have recently concluded in these pages (MR, 7/1999) from our
survey of the capitalist prospect in Africa the likely result is
"relegation to the margins of the global economy, with no visible prospect
for continental development along capitalist lines....Africas development,
and the dynamics of global capitalism are no longer convergent, if ever
they were." The point stands, I fear. And what of South Africa itself in
this regard? In his own analysis of Africa the eminent sociologist Manuel
Castells sees somewhat more room for South African manoeuvre within global
capitalism than is the case elsewhere on the continent.

Castells argues this because of the countrys size and relatively
sophisticated economic structure compared with other African countries
("South Africa accounts for 44 percent of the total GDP of all sub- Saharan
Africa, and 52 percent of its industrial output," he reminds us). And yet
even Castells must conclude his discussion of South Africa by evoking the
possibility of South Africa falling, like "its ravaged neighbors," into
"the abyss of social exclusion." As he writes, "the real problem for South
Africa is how to avoid being pushed aside itself from the harsh competition
in the new global economy once its economy is open."(26) Not easily, is the
most plausible response, a point reinforced by numbers that indicate not
the dramatic increase in employment figures forecast by those who launched
GEAR but a spiraling downward trend in that regard (a loss of at least a
half a million jobs between 1994 and 1999, it has been estimated). These
figures are paralleled by evidence in such spheres as GDP growth,
investment, savings, exports and interest rates that "virtually all GEAR's
targets were missed" and missed by a very great deal.(27) Indeed it is
difficult to escape the conclusion that, in the summary of one analyst,
"GEAR has been associated with massive deindustrialization and job shedding
through reduced tariffs on imports, capital flight as controls over
investments are relaxed, attempts to downsize the costs and size of the
public sector, and real cuts in education, health and social welfare

To highlight such negatives, it is sometimes said in South Africa, is to
indulge in "Afro-pessimism." But it can much more easily be argued that the
real "Afro-pessimists" are those who state that South Africa has little
choice but to tag along behind a global capitalism that actually offers it
very little by way of development prospect. Colin Bundy, the South African
historian, acknowledged some years ago that to continue to hold out the
prospect of a socialist transformation in South Africa might seem to
require something of a "leap of faith." But, he continued forcefully, "to
imagine that a milder mannered capitalist order can secure a decent future
for the majority of South Africans -- or that deracializing bourgeois rule
will meet the aspirations of exploited and oppressed people -- or that
South Africa can somehow be absolved of its economic history and enter a
future like that of Sweden or Taiwan: now that really requires a leap of
faith."(29) Surely there are stronger grounds upon which to build an
"Afro-optimism" than through such a feckless flight to the right.

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