AC Madiba cover

This is the second extract from the current African Communist

This relative failure was, in part, the result of another failure – a misreading in the early 1990s of what we were dealing with from the side of South African monopoly capital. There was an illusion that it would be possible (and desirable) to pursue a patriotic, “win-win”, “social democratic accord” between labour, the

new ANC-led administration, and South African monopoly capital. The model that was assumed to be applicable to post-apartheid SA was a re-play of the social democratic pacts that operated in much of post-World War 2 Western Europe through to the early 1970s (the “golden epoch” of capitalism).

Perhaps this was not an illusion, but part of a deliberate strategy to consolidate a particular relationship between the post 1994 state and monopoly capital. This could be especially so given the dedicated placement and training of our cadres who played a very key role in the evolution and driving of the 1996 class project. Some were sent to Goldman Sachs, Harvard School of Government, etc, as well as the role they played in sidelining some of the key research and analyses by the Macro-Economic Research Group.

Nevertheless…. the illusion that SA in the 1990s was ripe for such a patriotic pact was grounded on three interrelated illusions:

It failed to appreciate that South African monopoly capital (unlike West European capital in 1945) had not been ravaged by war, with factories destroyed and a work force scattered or disappeared. In the interests of restoring profitability, post-WWII West European capital was inclined to act “patriotically”, by investing in national reconstruction and development re-building destroyed economic and social infrastructure, investing in training, and paying high tax rates. By contrast, while South African monopoly capital had suffered declining profits and growth rates through the 1980s and early 1990s, it was not on its knees. Sanctions and strict foreign exchange controls had led to increasing accumulation of surplus within the country, leading to grow

ing conglomeration with inter-twined mining and finance capital moving into manufacturing, forestry, logistics, retail, property and services. SA monopoly capital looked to a democratic transition as an opportunity to disinvest out of the country, to globalise, to financialise and to unravel its diverse multi-sectoral holdings by focusing on key assets to maximise “share-holder” value. Patriotic investment into national reconstruction and development was not a priority.

The social democratic illusion in SA also failed to appreciate that not only was SA 1994 not Western Europe of 1945, but that the developed capitalist world itself had changed since 1945. The hey-day of social democratic accords, even in the Nordic countries, had long since come and gone. The very successes of these social accords in achieving near full employment and an extensive social wage had greatly strengthened the bargaining power of the working class and popular strata (although still within the confines of a capitalist system). This resulted in the social pacts entering into a period of conflictual stagnation (expressed economically in rising inflation), which was eventually “resolved” through a class offensive against labour and the welfare state (Thatcherism) and what later became known as neo-liberal policies (monetarism, Reaganomics, etc.) which enabled national monopoly capital to break out of national compacts, spurring on three decades of accelerated globalisation in pursuit of cheap labour markets in the developing world, and growing speculative financialised activity.

The 1994-era South African longing for a Nordic style social pact also failed to appreciate that the post-war reconstruction of Western Europe (and Japan) was greatly assisted by US aid (Marshall Aid) in a particular conjuncture that no longer applied globally in 1994. It was thought that a democratic SA would benefit from major flows of foreign direct investment as a result of our “universally acclaimed” good behaviour in achieving a negotiated settlement. But in 1945 Keynesian economics, not neo-liberalism, was the globally dominant ideology in the capitalist world. Perhaps an even more important contrast was that US aid to promote (capitalist) reconstruction and development in Western Europe and Japan was driven by the new competing reality of an expanding socialist bloc in East European and (after 1949) in China. In 1994 this “threat” was no longer felt in the US.

It is important to remind ourselves of all these contrasting geo-political and economic realities – because the social democratic illusion of an all-in, multiyear social pact with monopoly capital is still being held up as SA’s best hope in the National Development Plan (NDP), for instance. This is how the NDP envisages the social accord that lies at the heart of its overall political vision:

Labour agrees “to accept lower wage increases than their productivity gains would dictate”. While business agrees “in return…that the resulting increase in profits would not be taken out of the country or consumed in the form of higher executive remuneration or luxuries, but rather reinvested in ways that generate employment as well as growth.” (NDP, p.476).

The hopelessly utopian nature of this proposal is emphatically underlined by what has actually been happening over the past 20 years of democracy in South Africa. As even the recent Goldman Sachs 20-year report card on South Africa acknowledges, labour productivity has far out-stripped wages. According to the

Goldman Sachs report labour productivity per worker trebled in a decade – from around R88 000 in 2002 to around R256 000 in 2012. (Of course, these productivity gains have been achieved largely through increasing capital-intensity with mass retrenchments of semi-skilled workers).

Notwithstanding these dramatic increases in labour productivity and resulting increases in profits, monopoly capital has generally done the exact opposite of what the NDP hopes it will do – paying itself higher executive remuneration, consuming imported luxuries, and not re-investing but disinvesting and/or maintaining an investment strike while diverting surplus into financialised speculative activity.

Carry on reading



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