By Jeff Rudin | Daily Maverick | 06 Dec 2023
From what we already know about the government’s rescue plans for Eskom – plans widely supported by business and others – their emergency measures include more neoliberalism. That is not the way to re-float Eskom and make it seaworthy. This is the final contribution of a four-part series.
Read Part One, Part Two and Part Three.
An apparent puzzle
Neil Coleman, co-founder of the Institute for Economic Justice, speaks for many on the broad Left with his answer to this pertinent question: “Bad economic policies are pushing us over the social cliff.”
Another highly respected broad Left economist, Asghar Adelzadeh, provides much the same consensus analysis with his article headlined: “Economy is stuck in crises because government keeps doing the same thing”.
The “same thing” is the “bad economic policies” enforced since 1993 that have only worsened the unemployment, poverty and inequality the government claims to be addressing, as we have seen in parts two and three of this series.
They also happen to be the policies sinking Eskom.
However, a recurring theme in all parts of this article has been the reminder that what some of us see as crazy, is the essence of rationality for others. It all depends on where we stand in our capitalist political economy.
What is guaranteed is that if those most privileged by our social and economic system did not benefit from the policies that worsen unemployment, poverty and inequality, those policies would not still be the dominant ones.
But it helps no one if we, the broad Left, merely attribute these policies to what we call neoliberalism; a term we seldom, if ever, explain.
So, what is this neoliberalism that makes the economic and political elite behave in ways that bewilder many of the rest of us?
Neoliberalism and its sustaining successes for the elite
Neoliberalism defies easy definition. Naomi Klein manages to identify its main policy pillars: “Privatisation of the public sphere, deregulation of the corporate sector, and the lowering of income and corporate taxes, paid for with cuts to public spending”, in her 2014 classic, “This Changes Everything: Capitalism vs the Climate” (p.72).
Some of the neoliberal strands not immediately evident in her definition include:
- Restricting inflation to an arbitrary low band;
- The user pays principle, which turns citizens previously provided with public benefits into customers able to consume only what they’re able to pay for;
- Making the public providers of public services self-financing via the full cost recovery principle;
- Export-led growth;
- Reduced import tariffs;
- Eliminating controls on the free flow of capital;
- The business-friendly rigid application of patent laws and intellectual property protections;
- The more recent attack on public wages (while protecting the salaries of senior levels of the public service) and,
- The now standard austerity budgets.
Behind all of these policies – as number 10 – is “the religious belief” that markets are always efficient and the corollary, that governments are perpetually inefficient, as Joseph Stiglitz, a former World Bank chief economist and Nobel economics Laureate, put it in 2012.
Measured against these metrics, neoliberalism has been a sustained success for those who benefit, rather than the “resilient failure” seen by its critics.
Refusal to accept the contradictory consequences of neoliberalism
1996 is usually taken as South Africa’s formal adoption of neoliberalism, with GEAR, “Growth, Employment and Redistribution: A Macroeconomic Strategy”.
Among its first five-year targets, fiscal deficit, inflation and reduced public spending were all general successes. Increased private investment, job creation and GDP growth were the standout failures. This is to say, the macroeconomic objectives were achieved but at the inevitable expense of the social challenges of poverty reduction and employment creation.
The ANC government, however, would have none of this. With free markets being central to neoliberalism, our government preferred attributing GEAR’s failures to allegedly avoidable “rigidities and frictions” in the economy.
To eliminate these market impediments, GEAR was replaced in 2005 by the Accelerated and Shared Growth Initiative for South Africa (Asgisa). No more needs to be said about Asgisa (or its several replacements beginning with Jacob Zuma’s New Growth Plan of 2010) other than noting that Asgisa was supposed to halve unemployment and poverty by 2014.
The cruel failures of all these plans have led to accusations of betrayal and sell-out by former freedom fighters. These are harsh or lazy judgements.
A better understanding of why the ANC government is still staunchly committed to neoliberalism is needed – not to persuade the government to change its position, although that would be welcome, but rather for us to be better placed to critique the government’s and business’s plans for effectively sinking Eskom.
Recent events and further statistics add to the importance of this better understanding.
Michael Sachs – whose 2017 “bombshell resignation” as deputy director-general in the Treasury’s Budget Office over what Carol Paton called Zuma’s “arbitrary and capricious budgeting” – pulled no punches when addressing Parliament on 8 November on the Mid-Term Budget Policy Statement presented to Parliament on 1 November.
Sachs, who is now an adjunct professor and head of the Public Economy Project at Wits University’s Southern Centre for Inequality Studies, noted that the policy statement constituted a new budget and, as such, was probably unconstitutional.
He observed, according to Business Day, that the proposed budget was deeper and more sustained than anything previously attempted.
Real spending on basic education and healthcare was being cut by R16-billion and R14-billion, respectively, with the main burden of the consolidation continuing to be on government spending, with intended falls of 3% over the medium term and a 6% fall on services.
These austerity proposals were, for him, “not socially sustainable”.
Asghar Adelzadeh was even more explicit in his article some two weeks before Sachs’ parliamentary address. He noted that the government’s latest finance plan “now bluntly predicts an outlook of low growth and high unemployment”.
This acknowledgement, he says, shows that the government has reached an important crossroads:
“It can continue as before knowing that it will not reach the required levels of growth and employment, or it can follow the heterodox policies of other countries that have produced much better results.”
Sachs leaves no doubt that the government chose business as usual.
And business-as-usual means exempting their own interests from the austerity they impose on everyone else.
“The SA government’s priority is clear — VIP protection matters more than the NPA”, as Stephen Grootes explained: growth to the former and cuts to the latter.
Two days after Sachs addressed Parliament, the South African Human Rights Commission found, following an in-depth investigation, that child hunger in the Eastern Cape qualified as a disaster and should be declared as such under the Disaster Management Act
On 10 November, Eastern Cape parents were back in court pursuing a six-year legal struggle against grossly overcrowded classrooms: With the Education Department’s norm being 40 pupils per class, the norm in parts of the Eastern Cape is 80, with 100 not being unusual.
On 21 November, Daily Maverick explained a consequence of the NPA cuts. While continuing to invoke “our people” as the rationale for what they do, the government’s fixation on neoliberal shibboleths remains low budget deficits and debt-to-GDP ratios along with an inflation rate of between 3-6%, rather than employment, a major cause of poverty and inequality.
This brings to mind US President Joe Biden’s budget speech – which includes his $813-billion “defence” expenditure: “Don’t tell me what you value, show me your budget, and I’ll tell you what you value.” (Daily Maverick Newsletter 24 November 2023).
Why the ANC government is chained to neoliberalism
Among the main reasons I offer are:
1) Extracts from the address by President Thabo Mbeki at the fourth Nelson Mandela annual lecture, 2006. The fact that this speech is now all but forgotten speaks of its unwelcome pertinence:
“I am arguing that the new order born of the victory in 1994 inherited a well-entrenched value system that placed individual acquisition of wealth at the very centre of the value system of our society.”
Rather than this being particularly South African, it “was in fact symptomatic of the capitalist system in all countries… Since the onset of capitalism… the values of the capitalist market, of individual profit maximisation… tended to displace the values of human solidarity…. replacing them with the pursuit of personal wealth.
“Thus every day and during every hour of our time beyond sleep, the demons… that stalk us at every minute, seem always to beckon each one of us towards a realisable dream and nightmare. With every passing second, they advise, with rhythmic and hypnotic regularity – get rich! get rich! get rich!”
Escaping poverty has led to the imperative of getting rich: “In these circumstances, personal wealth and the public communication of it… becomes… [how]) we communicate… that we are worthy citizens… the very exemplars of what defines the product of a liberated South Africa…
“The meaning of freedom has come to be defined not by the… gift of liberty, but by the designer labels on [our] clothes, cars… the spaciousness of our houses and their geographic location”.
He concludes: “Many in our society have come to accept… that each one of us is as excellent a human being as our demonstrated wealth suggests!”
2) Extracts from Frantz Fanon’s prescient “The Wretched of the Earth” (1961). The book was written during the Algerian struggle for liberation from France. His references to the mother country are to France. Mbeki’s extraordinary speech provides a South African form of what Fanon observed 55 years earlier. As with Mbeki’s speech, a precis is a poor substitute for the prose:
“National consciousness, instead of being the all-embracing crystallisation of the innermost hopes of the whole people… will be… only a crude and fragile travesty of what it might have been…
“The national middle class which takes over power [from] the colonial regime is an under-developed middle class. It has practically no economic power, and it is in no way commensurate with the bourgeoisie of the mother country which it hopes to replace, in its wilful narcissism…
“The national bourgeoisie of under-developed countries is not engaged in production, nor in invention, nor building, nor labour; it is completely canalised into activities of the intermediary type. Its innermost vocation seems to be… to be part of the racket. The psychology of the national bourgeoisie is that of the businessman, not that of a captain of industry.”
Colonialism had, in their eyes, left them with a “mission” that had “nothing to do with transforming the nation”, and that its mission, more “prosaically”, was that of:
“… being the transmission line between the nation and capitalism, rampant though camouflaged… The national bourgeoisie will be quite content with the role of the Western bourgeoisie’s business agent… But this same lucrative role, this cheap-jack’s function, this meanness of outlook and this absence of all ambition symbolise the incapability of the national middle class to fulfil its historic role of bourgeoisie… In its beginnings, the national bourgeoisie of the colonial countries identifies itself with the decadence of the bourgeoisie of the West. We need not think that it is jumping ahead; it is in fact beginning at the end. It is already senile before it has come to know the petulance, the fearlessness or the will to succeed of youth.”
Referring to the pre-independence leader, who embodied the general aspirations for independence, political liberty and national dignity, but, as soon as independence is declared, he wrote:
“Far from embodying in concrete form the needs of the people in what touches bread, land and the restoration of the country to the sacred hands of the people, the leader will reveal his inner purpose: to become the general president of that company of profiteers impatient for their returns which constitutes the national bourgeoisie.”
3) Not sell-outs but class-determined interests – as Mbeki makes clear, while there are notable exceptions, the fruits of liberty for the fortunate few are individual wealth and status. With different levels of ambivalence, they come to terms with not having struggled to be poor. For most of them, this means hanging on to capitalism in the expectation that what is good for capitalism is their assured way of devoting “every passing second” to “get rich! get rich! get rich!”
In this, our black bourgeoisie – Mbeki’s term – is no different to the national bourgeoisie in the newly “independent” countries Fanon wrote about in 1961. Whether this is a sell-out or just the outcome of most multi-class national liberation struggles is a matter of where one stands in these class struggles.
4) Doing what is best for the captains of capitalism is contingent on the black bourgeoisie getting a suitable payoff. So far, despite grumblings, the black bourgeoisie seems satisfied. So, too, do the old bourgeoisie, who still dominate in terms of ownership of wealth and the management of the major companies.
And so they all should.
Despite South Africa’s economic woes, the headline in Ed Stoddard’s Daily Maverick article, “Wealth inequality in South Africa has risen significantly over the past two decades, according to the latest UBS Global Wealth Report”, paints a reassuring picture for the rich. “The bottom line”, it concludes, is that “the haves have got more and the have-nots have got less”.
Stoddard finds this irrational because, as I have argued, he doesn’t allow for the different rationalism of the particular class interests dictating government policy. Hence, his disapproval of South Africa’s “podium performance” when it comes to growing inequality.
“This speaks volumes to the ANC’s stated three-decade quest to lessen poverty, unemployment and inequality.” These plagues are capitalism’s production. A large number in the government and ANC might prefer if it were different, but reproducing neoliberal capitalism – with its triple plagues Stoddard identifies – comes way first when deciding policy priorities.
This priority is further reflected in the government’s fiscal policies over nearly 30 years.
5) Inflation. Among the many contradictory outcomes of neoliberal capitalism is inflation. Restricting inflation is among neoliberalism’s key objectives globally. Yet neoliberalism’s success in making the rich ever richer is now responsible for Europe’s inflation crisis, according to the International Monetary Fund.
6) The power of the compulsion to “Get rich! Get rich! Get rich!”
Chris Makhaye’s Daily Maverick article, “Assassination Nation”, details this terrifying power, which increasingly includes contract killings.
“Trained assassins,” he informs us, “have been making their presence felt… across the political spectrum, over tenders and jobs in municipalities, and… in business, to settle disputes through the barrel of a gun.”
And then, there are the not irregular reports of spouses who kill husbands/wives and multiple children over a period of years for high insurance payouts.
7) Ideology and paradigm shift: whether it’s ideology in the Marxian meaning – “the ideas of the ruling class are in every epoch the ruling ideas… The class which is the ruling material force of society, is at the same time its ruling intellectual force” – or paradigm shift – best expressed by John Keynes, who was long dead by the time it was introduced by Thomas Kuhn in 1962: “The difficulty lies not so much in developing new ideas as in escaping from old ones” – it is necessary to recognise the power of conformity.
8) But how do they manage to sleep? My brief answer is they play the race card (and)… the dilemma they face is how to become capitalists without capital, with the challenge for many now being how to get even richer. Other than the lucky few – including President Cyril Ramaphosa – who were made capitalists by the mining and insurance companies in the early 1990s, they are merely taking back what was theirs to begin with, or what apartheid prevented them from having.
Ironically, they use the fact that 81% of South Africa’s population is black African – which automatically gives the global poverty that capitalism creates or perpetuates a black face – as proof of enduring racism and failures of “transformation”. This, in turn, allows them to promote the further extensions of BEE and affirmative action to obtain or extend the riches associated with Whiteness, as Mbeki explained.
Their sense of injustice not only provides the rationalisation of how they got rich but is also used to promote their own advantage in their ongoing intra-class struggle with the established capitalists from whom they want more and more.
With 80.97% of the population being black, equity demands their ownership of 80.97% of South Africa’s wealth.
Saving the sinking Eskom
Eskom officially took the ill-fated neoliberalism onboard in 2001, via the Eskom Conversion Act which came into effect on 1 July 2022.
This came too late to prevent Eskom – now derided for being a monopoly, among other things – from receiving the prestigious international award at the Financial Times Global Energy Awards ceremony held in New York in December 2021.
How, one may well ask, did this Eskom manage to sink to its current depths?
From what we already know about the government’s rescue plans for Eskom – plans widely supported by business and others – their emergency measures include more neoliberalism. This gives us the first of the 10 musts to re-float Eskom and make it seaworthy.
All 10 are compatible with capitalism but not in its neoliberal form.
The 10 musts for a refloated Eskom
- Fundamental political change: All the changes urged by this article, not only the Eskom one, require an acknowledged neoliberal-free paradigm shift. This takes it way beyond Raymond Suttner’s two-part “New forms of hope and collectivity for universal emancipation”. Without such a shift nothing will change, regardless of which political party may be in government. This essential shift is far from easy as long as neoliberalism meets the main needs of the privileged. As Kenneth Galbraith noted, in 1977: “People of privilege will always risk their complete destruction rather than surrender any material part of their advantage.” (“The Age of Uncertainty” p22)
- Corruption and gangsterisation: How do we bury corruption is a question buried in the multitude of conflicting answers of how to treat the corruption cancer. Few answers recognise outsourcing as the lifeblood of corruption. Although privatisation is a forbidden trigger word for most trade unionists, outsourcing – a form of privatisation – isn’t. Outsourcing became, and remains, an essential vehicle for BEE. Without outsourcing and the tenderpreneurs to which it gives rise, corruption couldn’t exist, at least not at anything like the scale we know.
- Electricity as a recognised human need or good: This means the universal provision of at least 350 kWh per household per month provided free by the state. This practice, with differences, used to be the case in many countries before neoliberalism.
- The end of the user pays principle: Tiered tariffs could still exist for households using more than 350 kWh. Being directly reimbursed by the State for this free electricity would provide Eskom with substantial and guaranteed income, which is very far from the current position, as Tracy Ledger explains in a Daily Maverick article.
- The end of full-cost recovery: This would be the outcome of the adoption of (2) and (3) above.
- Municipalities would no longer be expected to raise significant amounts of their revenue by selling electricity at a price higher than what municipalities pay (or ought to pay!) Eskom.
- A radically revised state-provided revenue system for both Eskom and municipalities would follow from (4) and (5) above.
- The democratisation of the governance of Eskom: This means an accountability structure that includes trade unions, academics/specialist NGO researchers and elected representatives from civil society. Boards are usually heavily made up of accountants and leading businesspeople. This was the composition of Steinhoff’s board, which failed to prevent the largest fraud in South Africa’s corporate history. Moreover, members of boards would not be paid for their services, although authorised and reasonable out-of-pocket expenses would be covered.
- Climate change: The pace and scale demanded of the transition to renewable energy – if there is to be any chance of not triggering run-away climate catastrophe – can be met only by a vertically integrated utility of Eskom scale (read here, here, and here). This is made even more urgent by the profligacy of neoliberalism and its impact on climate change. According to the previously quoted Oxfam Report, the ultra-rich are the biggest individual contributors to the climate crisis. Their individual investments emit a million times more carbon than the average person. The wealthiest 1% are responsible for twice as much greenhouse gas as the poorest 50% and, by 2030, their carbon footprints are likely to be 30 times greater than the level compatible with the 1.50C target of the Paris Agreement.
- Using public resources to finance Eskom’s refloating: The Alternative Information and Development Centre (AIDC) has provided extensive literature on how this can be done once free of neoliberalism. All these points have been developed in various ways by my colleagues at AIDC, including the just-published booklet, “Alternatives to Austerity – dealing with rising levels of public debt”.
Other neoliberal-free proposals
Returning to Natale Labia’s important question asking why some countries grow, but not South Africa, Dr Adelzadeh provides some useful answers for following up. His modelling and simulation work show that by 2030, poverty could be halved, unemployment reduced to 12%, a 6% increase in economic growth and a 16% reduction in inequality. He stresses there is nothing radical in his proposals.
That is, other than asking “a political party and government that embraced neoliberalism more than two decades ago to consider changing its economic orientation and policy by recognising that insisting on the same mainstream policy framework for another 25 years will only mean perpetuating poor macroeconomic outcomes and persistent high poverty and inequality.”
Daily Maverick provides us daily with important information. Yet, from many of the articles/op-eds it publishes, it’s clear that most of the writers operate within a narrow paradigm that rarely seems to be aware of other “ways of seeing”, as John Berger put it in his celebrated 1972 book of the same name.
Moreover, a general response to different understandings is to dismiss them with different words all meaning irrational, rather than being different ways of seeing, related to where we position ourselves in our understanding of the world. (I must confess to disbelief at Ed Stoddard’s glowing review of a book, “Climate Capitalism – Winning the Global Race to Zero Emissions”.)
I have grown frustrated with what, for me, are articles limited by not seeing – without necessarily agreeing with – the broader contexts and many other connections involved.
In this four-part series, I’ve attempted to draw out the organic connections between (1) the enduring failure to stop climate change; (2) the acceleration of global unemployment, poverty and inequality – although more pronounced in South Africa; and (3) the connections between these interconnections and the sinking Eskom.
My additional goal was that a better understanding of the intricacies of these multiple interconnections would enable readers of Daily Maverick to make better sense of what they read and, to this extent, make them less dependent on the “experts” to whom we’re all conditioned to defer.
To this end, I deliberately used Daily Maverick (along with the Mail & Guardian and Business Day) as my main sources of information. This is to say, I avoided hard-to-reach and often harder-to-understand “academic” journals and papers.
I soon discovered that I couldn’t do justice to my intentions without providing you, the readers, with information sufficient for you to make up your minds about whether there is any merit to what I’ve been saying. Hence, this series.
My thanks to Daily Maverick for facilitating its readers to decide for themselves by publishing my long article.
The better we understand a problem, the more likely we are to solve it. And there’s no shortage of problems out there.
This includes knowing why, as Arundhati Roy reminds us: “There’s no voiceless; there’s only the deliberately silenced, the purposely unheard.” DM
*This Opinion Piece was first published by the Daily Maverick.