Capitalism or socialism? We have no choice

It is not surprising that South Africans have trouble thinking straight. The poor live in a state of anxiety and insecurity, while high crime rates have led to a fortress mentality among the rich. Fear and anger permeate our opinions and shape our politics. The haves persist in the shadow of Zimbabwe’s ruin; the have-nots endure, increasingly infuriated by the lack of progress. A country riven with gross inequality is a nation intrinsically and continually on edge.

A survey conducted by Pewforum found that whereas 80% of sub-Saharan Africans believe their lives will improve in the next five years, 40% of South Africans thought it would not.

Instead of seeing the future as the only opportunity we have, South Africans fear it.

The media is often accused of stirring the pot, of selling fear. If the media is guilty, how much more so are the politicians on whom they report?

Politicians use fear in two ways: to frighten or to threaten people into submission. It is this climate that has created the ideological miasma on which we choke.

Old Afrikaans nationalists are now libertarian democrats. The former liberation movement is suddenly upholding traditional leadership as something progressive.The free-market Democratic Alliance is out promoting collectivism and wage subsidies. The left spouts right-wing African National Socialism. Communists are the new elite. Capitalists oppose state intervention, but then walk away from their social responsibilities. Former trade unionists are among the richest and most powerful men in the country. Unqualified bureaucrats earn more than their betters in private enterprise. Would-be young revolutionaries are rampant, avaricious consumers. Unionised workers lucky enough to have jobs go on strike to protest joblessness, even as they make it harder for the unemployed.

Liberals who raise legitimate concerns about the whittling away of democratic principles, of changes to our legal framework when nobody can foresee who will lead the country one day, are accused of being “anti-majoritarian” and racist; the way those opposing torture and rendition in the USA were labelled unpatriotic.

The ruling party embraces the absurd moniker, a “national democratic revolution”, a revolution moving with the speed of a glacier two decades after the overthrow of white rule.

The “second transition” on which the upcoming ANC policy conference is based is already subsumed in jostling for personal political ambition and ideological claptrap (old debates the world left behind long ago). The policy conference promises to be more a festival of politics than one of ideas.

Evident already in the discussion documents are strong ideological biases, defensive positions when examining the past, and a lack of intellectual rigour.

The most important question is not asked, never mind satisfactorily answered: Why did Gear fail?

Whoever can answer this question, as opposed to simply condemning the policy on ideological grounds, may well find the key to future policy.

The first decade of ANC economic policy, Gear, established a relatively stable macro-economic environment, but destabilised society. Why did it not create jobs? Where was the trickle-down effect? Why did inequality widen? How did all its promises evaporate?

Did Gear fail because it was curtailed by bungling bureaucrats and obstructionist capitalists? Is Gear alone to blame, or did failure to address land issues, HIV, a disastrous educational policy etcetera all play their part?

The ANC Mbekites believed capitalism was meant to deliver economic freedom and democracy political freedom. During its political transition, South Africa chose to pursue both simultaneously. This always put it in the category of an experimental state.

The question now appears to be whether we will see a rollback of political freedom and democratic rights in the name of “economic liberation”.

The exercise of democratic rights in the West was meant to keep the worst excesses of capitalist exploitation (indentured service, hazardous and polluted working conditions, child labour – my grandfather worked as a child labourer in the Belgian coal mines) in check, at least within their own democracies. In fact they transferred these exploitative practices to the developing world and used the wealth from extractive institutions to cushion their middle class.

The history of the labour movement in the USA shows how liberal bourgeois democracy allowed for a steady pace of appeasement, just enough to keep the economic and the political elite rich and safe. Each capitalist crisis was met with a few more concessions to the working class.

In the end, what passed for democracy was so much better than what had preceded it that people mistook it for the real thing. But a new aristocracy with less crude exploitative practices was in fact in power, a two-party state which allowed just enough class mobility (in the USA) and social security (in Europe) to keep up the appearances of legitimacy.

In both South Africa and the US, the biggest corporations are no longer investing in their native land. Globalisation has meant that what’s good for General Motors is no longer necessarily good for America. When the big companies of America lost their patriotism, the middle class quickly began to backslide.

In the USA a crisis point was reached under Bush’s wholesale mismanagement of that economy. Working class white Americans, finding themselves unable to afford their mortgages, educate their kids, fix their teeth and pay their medical bills, were in danger of revolt, of sidelining the cultural wars (abortion, gay marriage, evolution, gun ownership, legalised marijuana etc) that have for so long suppressed their class interests. Serious appeasement was required and the system acquiesced, allowing the unprecedented: the first black American president into the White House.

(Obama’s political entry even saw an increase in voter registration among hopeful South Africans.)

I’m not sure that our Polokwane “revolution” was that much different; things had become intolerable under Mbeki. But both Obama and Zuma (if one believes they ever really wanted to) have been unable to do much except patch up a collapsing system and renege on the best promises of their campaign.

As Greece becomes Zimbabwe, the Americans look to the Europeans and say: you have bankrupted yourselves with your idiotic utopian socialist beneficence. Meanwhile, Europeans blame rampant speculative capitalist greed and American-led algorithmic financialisation of the global economy for what appears to be an inescapable world depression .

Whatever the merit of these positions or whether too little good regulation or too many bad regulations are to blame, in the end the financial market has become one big Enron, a matrix of digital blips on screens. There are no factories, no production, no realisable underlying assets, let alone jobs. This is why a multi-billion dollar company like Lehman Brothers could overnight be worth nothing more than the market price of its empty office building in Manhattan.

South Africa too has made itself vulnerable by financialising its economy especially over the past decade. Moodys has again downgraded South Africa’s credit rating and our banks are under review.

The left in South Africa say it is a crisis of capitalism and its days of numbered. They are wrong. Capitalism will re-emerge; it is democracy that is in trouble.

In short: the global financial context which “forced” the ANC to adopt Gear is now far worse. The most economically informed and level-headed in government are letting slip signs of desperation. The economy shed another 75 000 jobs this year, and 107 000 in the last quarter of 2011. Labour has made great gains, but it cannot advance its interests further until the objective economic conditions improve.

Right-leaning economists blame the strangulation of the capitalist engine by over-regulation and ideological impositions from the state. But proposals from business are often insensitive. How do you tell people without shoes to pull themselves up by their bootstraps?

Left-wing economists blame the neoliberal elite pact. Everyone agrees that economically South Africa is hopelessly underperforming.

The remedies for our inequality proposed by the loudest sections of the ANC are ironically merely rehashes of old Afrikaner policies: BEE, nationalisation, central planning, a state bank, a massive overpaid civil service to mop up the unemployed. None of this is likely to fly. While they are about it, Cosatu might as well advocate the bringing back of sanctions against South Africa to stimulate our industrial base.

Outside the ANC policy huddle, the national debate is deadlocked by two obstinate beliefs: capitalism leads to economic oppression; socialism to political repression. Both these positions of fear and distrust become pernicious when muddled with race. The rocky lack of trust which constantly wrecks negotiations at Nedlac is proof of this failing communication.

The wit-gevaar creed of Numsa and the ANC Youth League leaves the door wide open for the entire policy agenda to be hijacked by the new unproductive elite, and the liberation movement to descend into political fascism.

The swart-gevaar conviction of many in the private sector and the global economy means a withholding of investment. The ANC’s mixed signals and uncertainty are alienating the constituency it most needs now in order to make a difference.

South Africa does not have a strong enough capitalist engine to fund a welfare state; and it does not have an efficient, professional civil service to run a more interventionist state. The only practical way forward is to urgently stop the haemorrhage – the extractive practices of both politicians and monopoly capital.

It is debatable which of these – endemic state corruption or capitalist exploitation – are doing more harm. The scale of the extraction of the country’s wealth by global capital is obviously much greater, but the capture of state resources by corrupt practices is a direct assault.

Government is highly unlikely to ever create jobs for those who can work, and wholly incapable of generating the surplus to support the unemployable. The tripartite alliance can talk until the cows come home and make all the plans it wants, but nothing will change unless it gets both capital and labour working again. A broader consensus, an economic Codesa, is required. And like its political predecessor, there will have to be compromises all round. It is never too late.

Follow Brent on Twitter.