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The economic question as the fundamental challenge in
the current period
By Blade Nzimande, SACP General Secretary
The SACP believes
that the run up to the Growth and Development Summit (GDS) presents the
Alliance with a favourable context in which to develop more adequate transformational
economic policies. Apart from the impending Summit, elections in 2004,
the accumulated experience of nine years in government, the failure of
the global economy to be an engine of growth in the semi-periphery, and
much greater fluidity and uncertainty in global economic policy perspectives
all create a context for pursuing greater Alliance economic policy unity.
It is up to the Alliance partners to rise to the occasion.
There are many recent and welcome signs of intra-Alliance
convergence - the key resolutions of the ANCs 51st National, President
Mbekis State of Nation evocation of a dual economy, and his reiterated
insistence that the ANC and government are not free market fundamentalists.
The proposed GDS is, itself, an indication that our Alliance is unified
around the conviction that the economic question is now, more than ever,
the fundamental challenge of our revolution.
Of course, we must also admit that this welcome Alliance
convergence sees us converging, in several significant respects, out of
quite different corners. Increasingly, in the recent past, key government
ministers have taken to portraying the GEAR macro-economic policy package
as a time-bound, conjunctural stabilisation programme rather than
what its acronym suggests it once aspired to be, a growth, employment
and redistribution strategy. In similar fashion, we increasingly hear
that industrial policy in the latter half of the 1990s amounted to time-bound
shock therapy to prevent de-industrialisation. We are told that the radical
liberalisation measures were undertaken, not out of ideological conviction,
but in order to fundamentally restructure a private sector economy that
was hopelessly over-protected and liable to melt-down without such drastic
interventions.
In this re-writing of history, there is also a tendency
to distort the positions of those (notably in COSATU and the SACP) who
expressed strong criticism of GEAR and of the radical liberalisation measures.
It is said that we favoured macro-populism, that we imagined government
could run up a huge deficit and that it could neglect inflation. Of
course, we never said any such things. We never argued that the budget
deficit or inflation were a matter of indifference. We argued against
the severity of budget cuts, against the brutal abruptness of liberalisation
measures, and we argued against mindless privatisation and the assumptions
of trickle-down. I do not think that anything has happened over the last
half-decade to persuade us differently.
However, we can choose to put all of the emphasis now once
more on debating who was right and who wrong in 1996. Or we can choose
to agree to differ on certain issues within the Alliance, while agreeing
that the current reality provides us with the possibility and the necessity
to seek strategic answers to the key economic challenges of our society.
It is this latter course that the SACP, for its part, will certainly seek
to emphasise. In particular, we welcome governments emphasis now on the
need for a focused effort on job creation, the promotion of earning opportunities
for the marginalised, and the acknowledgement that perhaps it is these
themes, rather than the competitive, formal economy, should be the focus
of industrial policy. Of course, some of our comrades in government will
argue that this is now possible because of the success of earlier policies.
We disagree. But we have no intention of making our disagreement the key
issue on the agenda.
Let us all agree that one of the primary contradictions
in our society is that of significant progress towards political democratisation,
whilst economic power remains essentially still with the same class forces
as under apartheid. In many ways the Presidents characterisation of South
Africa as two-nations and, even more pertinently, his more recent characterisation
of our society as a dual economy seek to capture this reality. If we
are to transform our country it is principally to these issues that our
revolution must turn its full attention to.
What are the challenges arising out of the above realities?
The reality now is that the qualitative advance
of the NDR is increasingly facing the barriers of an untransformed economy
(an enclave of development on the one hand, systemic underdevelopment
on the other). Any advance is daily and increasingly being proscribed
by an unfettered capitalist market economy. Put differently, the next
key qualitative advance of the NDR, after the democratic breakthrough
of 1994, is directly dependent on significant breakthroughs on the economic
terrain. The SACP has sought to characterise this as the imperative of
decisive economic measures, led by the state and buttressed by our mass
power, to change the current accumulation regime.
The SACP has consistently advanced the thesis that the NDR
seeks to resolve the national, class and gender contradictions, not in
isolation from, but in relation to, each other. The economy cannot be
mechanically reduced to the class question as it is simultaneously about
the national and gender questions. But fundamentally there is a limit
to which we can advance the struggle to address the latter contradictions,
without seeking to confront the class realities of our society. One could
even venture to say that we cannot at present make any significant qualitative
advances in the NDR without confronting the class question, both at the
level of the economy and the state. In other words, the class context
of the national and gender questions has become the primary challenge
of the period. It is for this reason that the SACP has, amongst other
things, recently been advancing the struggle for building a peoples economy
with a state-led, working class-driven overarching industrial policy,
aimed at benefiting the overwhelming majority of our people.
Our Strategy Conference in 2000, in evaluating the first
five years of democratic government, made the important observation that
the many socio-economic achievements of that period, in fact up until
today, have been directly as a result of state-led programmes. These include
the very impressive achievements in the provision of water, electricity,
housing, education, and clinics. We already said back then that where
reliance has been placed on private capital (for example, in the provision
of low-cost housing, or access to affordable financial services for the
workers and the poor, or job creation and the fostering of small and medium
enterprises) there has been dismal failure.
Even in the areas of affirmative action and black economic
empowerment from provision of basic services and poverty eradication
measures to promotion of black and women managers much more significant
progress has been made by the public sector. The private sector has made
limited progress in these areas, and only when pressured by the state.
All this requires that we ask some fundamental questions
about our policies and strategies for economic transformation. To what
extent have our policies of macro-economic stabilisation and repositioning
our economy for global competitiveness had the consequences (intended
and unintended) of reinforcing and strengthening of the class interests
of untransformed white capital? This has presented a contradictory reality
of using and supporting the very same (untransformed) white capital for
purposes of attaining our goals of restructuring towards global competitiveness.
Our policies have in fact in many instances had the effect of strengthening
- as a key platform for our global competitiveness the very same white
capital. We have even liberated this private capital from the shackles
of the apartheid order and allowed significant sections of it to list
offshore as global players SAB, Old Mutual, etc but with no tangible
benefits for our economy and the majority of our people. In other words,
our policies have been dualistic, focusing on adjustments favourable to
white corporate capital in the mainstream economy, without seeking to
fundamentally transform the mainstream economy thus reinforcing the
very dualism of our economy.
Of course, a legitimate question may arise as to which other
transformed (and patriotic) private capital could have been a vehicle
to reposition the South African economy in the current global reality?
Of course no other segment of such private capital existed. But another
important question is to what extent have we, as a government, pursued
policies, that explicitly, or implicitly, accepted an imperative to soft
pedal transformation, and over-accommodate white corporate capital, in
order to build our global competitiveness? Put differently, to what extent
have our economic policies principally sought to create an even freer
market economy with the hope that benefits from any growth from this will
trickle down to the majority of our people?
Using the analogy of a dual economy, while our government
has achieved some significant successes in delivering specific services
to people in the black, poverty stricken sector, the failure to transform
the mainstream white economy and its relationship to people in the black
poverty stricken sector has meant that, despite new houses, schools,
clinics and water connections, the masses in this marginalised economy
remain unemployed, with little or no income and they are incapable even
of finding the resources to sustain the new services. A number of questions
and observations arise from this reality. It is clear that our poverty
alleviation measures, important as they are, are not making any impact
on the mainstream economy, as they are not consciously coupled with
decisive interventions to transform the capitalist market. This runs the
danger of undermining the sustainability of the very interventions made
to push back the frontiers of poverty. One classic example of this is
that the very impressive rollout of telephone connections by Telkom, in
the context of failure to generate employment and transform the mainstream
economy, has led to more than 80% of these phones being disconnected,
as people cannot afford to pay. Similarly, the liberalisation of food
prices, particularly the maize price has led to the escalation of prices
in the food chain, notwithstanding our surplus maize production, thus
endangering food security for the overwhelming majority of our people.
It would be wrong to suggest that the crisis of unemployment
and poverty is simply, directly or even principally the result of government
policies. The deeply imbedded, structural nature of South Africas dual
economy (simultaneous enclave development, and mass underdevelopment)
is the primary reason. But it is imperative that we undertake a comprehensive
review of our own economic policies. Do they enable us to progressively
transform the deeply entrenched dual economy structure of our society?
Do they really lay the basis for a sustainable pushing back of the frontiers
of poverty? The Growth and Development Summit calls for such open and
self-critical reflection if it is to be successful.
Under these conditions it is not surprising that the task
of black economic empowerment has correctly taken on a new urgency. Objectively
our economy has hardly been transformed towards the interests of the overwhelming
majority of our people. The job loss bloodbath, affecting, in the main,
black workers, is a sharpening expression of the lack of transformation
of our economy. Even the very tiny emerging black bourgeoisie has in recent
years seen a decline in its fortunes on the JSE, it remains deeply indebted
to the white capitalist financial sector.
BEE is government policy and it needs to be intensified.
However, we need to ask the question why white private capital remains
untransformed and untransforming despite its benefits from the democratic
dispensation. It is no secret that white private capital has ironically
and objectively, been the major class beneficiary of the democratic breakthrough
of 1994. However there has not been enough pressure towards spreading
such benefits to the overwhelming majority of our people. Instead the
benefits of white private capital from the democratic breakthrough have
translated into the job loss bloodbath, at the direct expense of the black
workers and the poor of our country. It is therefore necessary that BEE
be intensified. However the danger of doing this (without far-reaching
measures to change the current accumulation regime) is that BEE will simply
become an add-on, rather than a fundamental component of transformation
itself. It is for this reason again that the SACP has been talking about
the need to build a peoples economy through peoples power in the economy.
To transform our economy will require a combination of measures
persuasion, negotiation and compulsion, including legislative measures
and mass power. We must not naively allow sections of private capital
to secretly draft voluntary charters with voluntary implementation, hoping
that this will take us out of the current economic crisis and jobs impasse.
For example, legislative compulsion through community reinvestment by
the financial sector is a necessary component of any measures to transform
this sector and the economy as a whole. In addition legislative compulsion
around the investment of the billions of surplus pension funds and millions
of unclaimed insurance policies is a necessary component to mobilise domestic
investments as a key strategic goal of the Growth and Development Summit.
This should, of course, be underpinned by sustained mass mobilisation
to pile pressure on private finance capital towards investment in infrastructure
for job creation.
Transformation of our economy must also include a review
and prevention of willy-nilly offshore listing by South African companies.
So far this has not benefited the country at all. It is also important
that the public sector should be strengthened as the primary deliverer
of social services, including the building of new institutions where necessary.
Of critical importance to us is the need for a state-led and working class-driven
overarching industrial policy, prioritising areas for job creation and
investment in infrastructure. To attain this again will require a combination
of measures persuasion, incentives and legislative and mass mobilisational
compulsion. The apartheid regime used prescribed assets to address the
problems of poor whites through the building of large parastatals and
forcing the financial sector to invest in government bonds. We are today
being told this is not feasible for reasons of the current global realities.
Whilst the issues prioritised for discussion and agreement
at the GDS do not constitute the entirety of a growth and development
strategy, approached with the above perspectives, the Summit can lay a
very firm foundation for a state-led, integrated growth and development
strategy. Let us openly debate these issues in order to use the Summit
as an important moment towards a new qualitative advance in the NDR.
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Input
to the Budget Vote Debate 18/3/2003 By Rob Davies, ANC MP and member of
the SACP Political Bureau
The budget debate
offers a unique opportunity each year for parties represented in this
Parliament to put forward their views on economic policy issues. It is
an occasion therefore that allows contending perspectives to be identified,
differences to be demarcated and the alternatives being presented to be
debated both by us as MPs and by the public at large.
The ANC, as the party of government has put forward its
approach in some detail - both in the President's State of the Nation
address and in the Budget speech. Our current perspectives were widely
canvassed and debated in processes that culminated in the adoption of
resolutions at our 51st national Congress held in Stellenbosch in December
last year. Our fundamental objective is an unshakeable commitment to roll
back the frontiers of poverty and bring a better life to our people. Our
basic approach is to see the challenges of promoting economic growth (an
increase in the output of goods and services) and improving human development
as inextricably interrelated requiring therefore integrated and multi-faceted
strategies. As the Hon. Barbara Hogan has indicated the complex reality
created by the appalling legacy of apartheid and the new challenges of
globalisation have required different emphases at different phases. Our
approach has always been to consolidate on achievements of one phase to
bring us ever closer to being able to promote lasting and sustainable
solutions to the problems of poverty and underdevelopment confronting
our people. Priorities in the current phase include pushing forward the
micro-economic reform strategy as a key component of raising investment
and promoting growth. Key initiatives here include infrastructure development,
promoting a transition from dialogue to collective action by stakeholders
within the framework of the Integrated Manufacturing Strategy and the
Growth and Development Summit. Simultaneously, we have recognised the
need for a number of new focussed, integrated initiatives to combat poverty
and unemployment. These include expanding public works programmes, accelerating
efforts to promote income generating opportunities for people in the so-called
informal sector, encouraging the growth of a viable cooperative movement
and expanding the social security system. All of this is informed by the
target we set ourself in Stellenbosch of halving the number of people
who are unemployed by the year 2014.
The Hon. Hogan has already eloquently addressed a number
of these points, and other speakers from our side will elaborate on various
aspects later. I want to use the time still available to me today to reflect
on the alternative offered by the party that is today physically on my
left, but which in political and ideological terms is far to the right.
What is the alternative that the official opposition in
this Parliament has to offer? We have recently seen a series of populist
interventions from the DA on various issues of poverty and social transformation.
We are told that the DA will be launching a new economic policy document
in a few days. No doubt this document will offer more of the same. Anyone
who dropped in from Mars, and had no other idea of what the DA was, could
be forgiven for imagining that the DA was a party preoccupied with promoting
a Basic Income Grant, with reducing poverty and unemployment and with
promoting access to treatment for sufferers from HIV/AIDS. Those of us
who don't come from Mars, however, know that behind this new found façade
of concern with poverty, promoted with all the sincerity of a used car
salesman, lurks another more familiar DA.
This is the DA whose core economic policy perspectives have
frequently been presented in the form of a winge about reducing taxes
for the benefit of the rich. If you doubt what I am saying I suggest you
consult what I presume still to be the DA's current economic policy document
- entitled "DA Economic Policy Information". The first substantial
chapter of that document is entitled "Fiscal Reform" and it
begins with a call for reduction in the tax burden. This is immediately
followed by a more specific call to "reduce the maximum marginal
tax rate on individuals". If you want another example consult the
speech of the Hon Ken Andrew in the 2001 Budget Vote debate recorded in
Hansard of March 15, 2001, columns 1251 - 1257. Most of this speech is
a rant about the alleged excessive tax burden on middle and upper income
tax payers and the impact this was allegedly having on emigration by what
he called "high income and high-wealth individuals" This is
the DA we are familiar with.
It is the DA that has consistently opposed capital gains
tax again because it would hurt those same "high wealth individuals".
This familiar DA, let us remind ourselves, has also consistently championed
less progressivity in the tax system by advocating a shift away from income
and profit based taxes, in which the rich pay proportionately more, in
favour of expenditure taxes like VAT, where the poor pay proportionately
more. The DA we all know is a party that has instinctively supported less
regulation driven by a naive belief that markets will always deliver,
when in fact many government activities arise precisely because markets
have failed to deliver. This is the party whose instincts have led it
to blindly champion corporate demands on issue after issue resulting in
what its leader later acknowledged was a biggest tactical blunder when
in 1996 it slavishly responded to lobbying by pharmaceutical companies
and opposed the Medicines and Related Substances A/B.
This, too, is a party that has championed and continues
to champion a big bang, ideologically driven approach to privatisation.
I won't pretend that this has been an easy issue for the ANC or the alliance.
But we are agreed on a number of fundamental principles. These include
agreement that the fundamental issue with regard to SOE's is one of restructuring,
not privatisation and that the main goal of restructuring is to make SOEs
operate more effectively as public institutions operating according to
a public and developmental mandate. The second principle is that where
restructuring involves elements of privatisation or nationalisation the
decision will be taken on a case by case basic on the balance of evidence.
In other words there is a strategic approach to this issue. Many of the
biggest debates in our ranks are not over these principles but over the
details of particular plans or proposals. The DA's view by contrast sees
large scale privatisation as a panacea - in which SOEs are mere cash cows
to be milked for revenue to avoid having to tax the rich, and in which
privatisation is seen as an unmitigated benefit based on naïve belief
that the private sector or profit seeking institutions will always deliver
services better. The DA, in other words has come to defend the kind of
big bang, ideologically driven approach to privatisation, which Nobel
economics laureatte Joseph Stiglitz, speaking note from a perspective
of support for privatisation, has severely criticised. In his recent book,
Globalisation and its Discontents, Stiglitz argues that while in his view
strategic privatisation of certain assets can be beneficial under the
right circumstances, proponents of big bang approaches ignore the reality
that there are a range of vital services that profit maximising institutions
are simply not equipped to deliver. He also criticises the cavalier dismissal
of concerns and fears of workers about threatened pay offs arguing "
moving people from low productivity jobs in state enterprises to unemployment
does not increase a country's income and it certainly does not increase
the welfare of the workers".
Even the DA's new flagship populist gesture - its supposed
support for a Basic Income Grant
is fundamentally flawed by its overall ideological perspective.
The BIG emanates as a proposal from a Commission appointed by government
and ibeing championed by forces within our tripartite alliance. The Deputy
President confirmed last week that this remains under consideration as
a proposal within a shared perspective that accepts the need for a comprehensive
extension of social security. The DA has opportunistically taken up the
call for a grant of R100 per month, but added a proposal that this be
financed by an increase in VAT. What the one hand giveth, the other taketh
away. When a similar proposal was put by academic economist, not linked
to the DA, to the hearings held by the finance committee it was suggested
that VAT be raised to 21%. It was further argued in those hearings that
this would be of net benefit because families that would be dependent
on the grant consume only a few zero-rated commodities. Perhaps yes for
the very poorest of the poor, but for many other poor people and ordinary
working people raising VAT to 21% would be a cause of great hardship.
What this debate has highlighted is the total unacceptability of proposals
that envisage the burden of redistribution measures falling on other strata
of the poor rather that the rich. Even the DA's flagship populist gesture
is constrained by the need to prioritise the interests of its core constituency
- the rich and the privileged.
This then is the DA that we are familiar with. The DA we
know is a party that has consistently rooted its core economic policy
perspectives in calls for tax relief for the rich, rapid big bang privatisation,
weakened labour rights and opposition to affirmative action _ which its
current policy document calls "race based quotas". If you doubt
that look at the section of their policy document, headed "Priorities".
This says and I quote " Many of the impediments to savings, investment
and growth will disappear if the DA's macro - economic, privatisation
and labour policies are implemented".
This DA that we are all familiar with is, in short, recognisable
as the local peddler of an ideology that is well known internationally.
It is an ideology described by prominent British commentator, Will Hutton,
in his recent book, The World We're In, in the following terms: "
the
rights of the propertied and the freedom of business come before any assertion
of the public interest or social concern
taxation is depicted as confiscation
an
intolerable burden that should be reduced. The social, the collective
and the public realm are portrayed as enemies of prosperity". Whether
they know it or not, the DA are our own local Tories or neo-conservatives
- the purveyors of an ideology that continues to enjoy support in powerful
circles of the rich across the world, but which is increasingly widely
recognised as incapable of producing answers to the central challenge
facing peoples across the world of promoting inclusive growth and development,
eliminating poverty and reducing inequality within countries and globally.
Theirs is an outmoded and passé neo-conservative approach whose
claims to offer a way forward - let alone the only way forward - have
patently proved to be false.
But, this is an ideology that is of critical importance
to the DA. The past decade or so, has seen the DA increasingly abandoning
the human rights liberalism of its predecessors - under whose banner a
small number of individuals campaigned with honour against human rights
abuses of apartheid. The contemporary DA has abandoned this approach in
favour of an aggressive economic, neo - liberalism which marks it as a
conservative force today. It is this ideological shift that underpinned
the DA's transition from a fringe group in the previous order to becoming
today the authentic representative of a sizeable section of the most backward
and reactionary forces in our country - united in their determination
to fight back against transformation in our country. For such a group
to present itself as a champion of the poor is rather like the Sheriff
of Nottingham masquerading as Robin Hood. The DA's campaigns on poverty
issues are ill thought through, populist gestures aimed opportunistically
at broadening its electoral support.
But I have news for the DA. Neither we, nor the electorate,
come from Mars. We know who you are and what you represent. Tony's new
façade of concern for the poor, to shift the metaphor, is like
the emperors new clothes. It won't take long to recognise that there's
nothing there.
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