Left Economic Strategy and the Capable State
Editorial Collective | Amandla! Issue No. 66 | October 2019
The problems in the South African economy are well documented: crippling poverty, sustained and worsening unemployment and wide inequality. Despite the depth of our economic crisis, and the manifest failures of orthodox policies to address it, certain corners of government seem set on pursuing “a business-as-usual” approach to economic policy. And by business as usual, we mean what is generally good for big business.
The recently released Treasury policy paper confirms this. The document was widely praised by the mainstream business press and liberal commentariat. “This is what Ramaphosa really wants!”, they seemed to chant in unison, hoping that treasury’s publication revealed a just reward for their tepid support for the president’s reform agenda.
True to form then, Treasury’s intervention lacks originality and regurgitates well-worn staples of conservative economics. Economic policy, according to the document, is really about improving an ill-defined “investor confidence”. We do that by pursuing microeconomic sector-specific interventions. There is no real room for debating broad macroeconomic questions as that debate has, allegedly, already been settled.
Thankfully, there are numerous progressive economists and policymakers who have different plans for fixing the economy, whether these relate to free higher education or funding Eskom’s debt while increasing the rate of decarbonisation. In some instances, such plans also align with ANC plans or with already-existing government policy. Despite this, progressives seem unable to translate policy thinking into policy proper and thereby are unable to bring about the changes needed.
There are at least two related reasons for the failure of the progressive left. First, we have been unable to unite our various policy proposals into a coherent, united vision – like those articulated under the banner of “A Green New Deal” in the US or the UK for example. Second, we have been unable to secure significant social mobilisation behind progressive solutions.
One problem feeds the other; absent vision means absent support. And without significant support, without a real constituency to address and appease, there is little pressure to construct a unifying vision. How to escape this vicious cycle?
Much is made of South African’s supposed susceptibility to populist slogans and politics. Yet the stability of our electoral landscape since the transition tells a different story. The broader public has not shifted in significant ways towards dangerous political fringes; there is no Bolsonaro in South Africa. It seems necessary to point this out, even while we are well aware of the potential for disaster – the rising ethno-nationalist rhetoric, the marrying of politics with evangelical Christianity, and the ever-present and disturbing threat of xenophobic attacks keep our feet firmly glued to the ground. Nonetheless, there is no real left constituency in between the conservatives, the right-wing economic liberals, the cautious and sentimental ANC loyalists, and the potential anti-democratic and dangerous political forces on the rise. We must ask why.
An incapable state
We should make a serious effort to understand the reasons behind the public disinterest in supporting progressive economic ideas. The lack of a coherent and inspiring progressive vision certainly plays a role. More fundamental, however, is the public’s general distrust in the capability of the state.
The state has lost its legitimacy for good reason. It lacks technical expertise and moral trustworthiness. The former has been exposed in multiple instances of service delivery failure and is perhaps best evidenced by the plight of Eskom. The country’s energy utility is saddled with a debt burden of over R400 billion. Thatfigure is amplified by the business press at every opportunity. It is presented as clear evidence for why the state should get out of the way and let private investors inject the necessary “efficiency” into the energy mix.
The state lost its moral status over years of corruption scandals. The scale and ambition of the looting has been so large that many South Africans are suspicious of any expansion of state programs. This would be read as code for expanding the reach of “state capture”. Who can begrudge this point of view?
It is difficult to counter such distrust in the state given the kinds of revelations made every day by investigative journalists and brought forward at the various commissions of inquiry, most notably the Zondo Commission. At a recent AIDC conference on Illicit Financial Flows, SAFTU general secretary, Zwelinzima Vavi, remarked that conservatives have been bolstered because the state itself has managed to discredit every institution that it should be using to bring about real socio-economic change. He warned that in such a context even the working class can be mobilised to defend a conservative agenda.
Corruption is rooted in a failed economy
There is a thread that ties the incapacity of the state, the scale of corruption and economic policy together. Conservative macroeconomic policy has hollowed out opportunities in the formal economy, turning the state into a vehicle for accumulation for an aspirant black bourgeoise class. “State capture” is not fundamentally about the moral failings of certain individuals within the state. Rather, it is a process that has been shaped by the post-apartheid political economy.
Nimrod Zalk has, for example, shown how orthodox economic policies enabled the restructuring of the steel and engineering sectors in a manner that has led to the “widespread destruction of engineering industrial capabilities; the foreclosure of opportunities to develop globally competitive engineering firms; underinvestment and ultimately crisis in the steel sector; and weakened manufacturing linkages and multipliers with the rest of the economy.” Such restructuring has taken place in other areas of the economy and has been performed for the benefit of the dominant conglomerate structure and institutional investors.
This process was policy induced, as has been the financialisation of the economy since the transition. This has further contributed to deindustrialisation and related unemployment, inequality and poverty. The result of this is what Karl von Holdt describes as a formal economic sector “dominated by established business and corporations” where “opportunities are few, the demand is high and competition is fierce”. In this context, the state has become the vehicle of accumulation for the new black elite, “the location of jobs, revenue, contracts, tenders and licensing and is an obvious resource in the formation of a new elite”.
Orthodox macroeconomic policy created the conditions within which state capture was to flourish. It has thereby directly contributed to the incapacity of our current state system.
This situation is a boon for defenders of the status quo. Even though the policy prescripts they supported have direct impact on state erosion, that very state erosion is used to support a private-sector driven economy.
How does the left break this circular legitimation process?
Fix the state, fix the economy
It is a difficult task. It seems to be a chicken or egg dilemma. To fix the economy we must fix the state. But in order to fix the state we need to fix the economy, and provide avenues for economic opportunity outside of it. This process must be handled delicately and with proper sequencing.
Yet currently progressives do not hold the power to undertake the task. While many policies exist on paper in government departments and ANC resolutions that would facilitate necessary changes, these are largely not implementable without Treasury’s approval. The resultant lack of delivery or poor performance often reinforces perceptions that they aren’t feasible.
Take the NHI pilot project. NHI projects used a World Health Organisation model in order to assess how many nurses and doctors are needed in specific clinics. However, as reported in Business Day, “the managers who did the analysis in facilities couldn’t fill identified vacant posts because posts had been frozen.” The head of the company that did the assessment of the pilot is reported as saying that the health department needed to work with treasury to ensure that posts can be funded. This seems like a common sense position to hold. The outcome however is a classic case of the impact of austerity.
Firstly we need to continue to expose the corruption of private capital. In this issue of Amandla! we tell the of Samancor, where workers have been robbed by dishonest owners of capital. We need to expose more of these stories. We need to point out how private capital actually works by exposing companies like Sibanye Stilwater and their practices that lead tocontinuous deaths of workers in their mines, as AMCU is doing. We need to continuously tell the story – private capital is the problem, not the solution.
Secondly we need to continually propose democratic solutions to problems of corruption and looting. A step in that direction is to fight for representatives of popular organisations to sit on the boards of all state owned entities. And those representatives must be required, by their organisations, to report back on what they have found.
And thirdly we must continuously struggle for democratic accountability to prevail in our popular organisations.
There is no capitalist solution. There is no administrative / bureaucratic / legal solution – the Zondo Commission should have taught us that. There is only a democratic one.