If the government is really pursuing this, South Africa is toast

Recently a friend passed on to me some information on the work of Dr Anthea Jeffery, who is head of policy research at the South African Institute of Race Relations and a prolific writer. She is the author of eleven books, including People’s War: New Light on the Struggle for South Africa and there are a number of interviews with her available on YouTube.

In one of her recent newspaper articles, The NDR elephant in the room Jeffery provides an account of the reasons why the South African economy has been shrinking, and will continue doing so. As the title of the article suggests, this can be traced back to the so-called National Democratic Revolution (NDR) — a frightening misnomer, particularly regarding the term, “democratic”. How so? Because, if Jeffery is right — and she has had access to all the relevant documents, and the current socio-economic state of affairs seems to bear out her claims — South Africans face a future in which present hardships are likely to resemble a picnic by comparison.

The article makes interesting reading, as does her book — and I would recommend that interested parties read it thoroughly (although it is quite a tome) — but here I want to focus on what I perceive to be the most important aspect of her research for the future.

Here is an excerpt from the article mentioned above, for those who don’t want to read it in its entirety:

“At the root of the rising economic crisis lies the ANC’s stubborn commitment to the National Democratic Revolution (NDR). The NDR is a Soviet-inspired programme intended to take the country by incremental steps — and over a period of 40 years or more — from a capitalist economy to a socialist one.

The NDR is the key reason for anaemic growth, high unemployment, exploding public debt and other economic ills. But despite the harm existing NDR interventions have already caused, the ANC remains determined to keep advancing its revolution.

The three most damaging NDR interventions soon to be introduced are:

The constitutional amendment allowing for expropriation without compensation (EWC), which is sure to have disastrous impacts on investment, growth, employment, the banking system, and macroeconomic stability;
The NHI proposal, which may have been delayed under the current budget but needs to be jettisoned altogether before it generates a state monopoly over healthcare, drives skills abroad, and greatly expands the scope for corruption; and
Prescribed assets for pension funds, both public and private, which will force them to fill rising revenue gaps and help finance the further stages of the NDR.”

One could think that the reference to “a Soviet-inspired programme” being implemented incrementally with a view, ultimately, to establishing a socialist (elsewhere she says “communist”) dispensation here, is pure nonsense. But, when you look carefully at the so-called interventions, then it is not difficult to detect an incrementalist logic. This becomes clearer when she lists the other prospective NDR interventions:

a sovereign wealth fund, into which a nationalised South African Reserve Bank may in time be compelled to transfer its R700bn in foreign reserves;
a new state bank to help crowd out burgeoning private banks;
another major energy SOE (focused perhaps on gas) to limit the scope for private-sector provision;
state-imposed employment equity targets for businesses to erode their efficiency and reduce their autonomy; and
onerous competition rules (brought into effect last month) to hobble “dominant” companies in retail and other sectors and give an artificial leg-up to BEE [Black Economic Empowerment] firms primarily held back, not by limited competition, but rather by low growth and restricted consumer spending.

Jeffery doesn’t hesitate to remind citizens of the deleterious effects these would have on governance in South Africa, exacerbating an already parlous situation brought about by egregious neglect on the part of the ANC government:

“All these NDR interventions are being zealously pursued by a government that has long failed to discharge its most basic responsibilities. Its core duties are, of course, among other things, to clamp down on crime, stamp out corruption, end irregular spending, stop daily sewage spills, sustain electricity and water supplies, provide good schooling and healthcare, enforce the rules of the road, and ensure sound governance in every sphere.”

What I find difficult to understand is that — on the assumption that Jeffery’s ideology-critical political diagnosis is accurate — the intelligent people in the upper echelons of the ANC, which there certainly are, do not appear to offer any resistance to what is undoubtedly a most disastrous trajectory, guided by an outdated and thoroughly discredited ideology.

People who read this blog regularly would probably be surprised to read this, coming from an outspoken critic of exploitative capitalism. I grant you that, but you may also recall that I have never sung the praises of communism, which was a historical disaster. There are instances of successful socialist economic systems, but these are usually on a small scale, such as the more than 270 kibbutzim of Israel. In addition to this the most exemplary countries in the world, to my mind, have a mixed socialist-capitalist economy, such as the Nordic countries or New Zealand. The point is — as I have written before — in a world where the hegemonic economic system is neoliberal capitalism, it is national suicide to pursue the exclusive path of communism; witness Venezuela and North Korea (not exactly shining examples of economic success). What about China, you may wonder. Aye, there’s the rub — particularly if the ANC sees China as the model to be emulated.

Anyone who believes that China is a purely communist country is sorely mistaken. I recall the surprise on my part when, in 2005, my partner and I visited five cities in China, including Shanghai, and we witnessed the unlikely name, on a high-rise corporate building: CAPITALAND. Admittedly, by then we had already been to Nanjing, so the fact of China’s economy being thoroughly capitalist was already known to us. But to proclaim it so openly, in huge letters, for everyone to see, was unexpected. Later, during our visit to a South African friend who is married to a Chinese woman and lives in Beijing, he told us openly that he enjoys more economic freedom in China than he did in South Africa or in Britain, where he met his future wife. “But don’t try to establish a political party or challenge the Chinese communist party,” he said, laughing, “that would be courting disaster.”

In a nutshell: China is a communist dictatorship, but its communism is restricted to the totalitarian manner in which the communist party runs the country. And they run the (capitalist) economy too. What China has is state capitalism — with financial markets and all — although some prefer to call its economic system a socialist market economy. In other words, they have a capitalist economy, but it is regulated by the communist party.

What lesson could — or should — the ANC government learn from this? Remember John Maynard Keynes, Britain’s most famous economist of the 20th century, whose theories dominated the United States’ policies until the 1970s, when they were challenged by neoliberal theorists such as Milton Friedman? Well, the key thing to remember about Keynes is his insight, that the state should retain the right to regulate the economy, instead of leaving the (fickle) market to determine what happens in the economy from day to day. In a certain sense one might say that the Chinese economic model is Keynesianism taken to extremes. The Chinese communist party does not hesitate to intervene — by devaluating the Renminbi (or Yuan) whenever it seems to be necessary, for instance.

Why is this a lesson for South Africa’s governing party, which seems hell-bent on collapsing our economy as an excuse for establishing a Leninist communist economy here? Because Chinese authorities have every right to presuppose that, whatever they decide about intervening in the Chinese economy, they have a workforce second to none in the world.

Remember when the Chinese built a huge hospital for Covid-19 patients in Wuhan in about 10 days? The Chinese are indefatigable when it comes to work. If the ANC could depend on such a workforce, and had the brain power to run the economy judiciously, a state-capitalist-communist country might work.

With all due respect, I don’t believe this is possible in South Africa, using South African workers.