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South African flux

Print edition : May 27, 2000 T+T-

Six years into democracy, South Africa is trying to come to terms with the ANC-led government's economic policies and the impact of globalisation on industry and labour.

A FEATURE that dominates most analyses of the economic situation in South Africa is the exchange rate of the rand with the dollar and the pound sterling and other major European currencies. The radio informs listeners on the hour about the fluctuating ex change rates, apart from putting out more detailed analyses in news bulletins dealing solely with the 'market'. This preoccupation does contrast with the near total absence of any serious analysis of the macro-economic policies of the government, the bro ader trends in trade and industry and labour and their impact on the people.

Thus, over the past few weeks one has read and heard about little but the 'downward trend' of the rand. The day (or rather the moment) when the value of the rand (briefly) came down to seven rands per dollar was highlighted in full banner headlines in th e front pages of the afternoon papers, though the subsequent strengthening of the rand did not receive such notice.

However, analysts drew many political lessons from the development. The 'collapse' of the rand was almost unanimously attributed to the failure of President Thabo Mbeki to condemn openly and publicly President Robert Mugabe both at the Good Friday summit in Victoria Falls and during his address to the nation on May 4 on the issue of the 'land invasions' in Zimbabwe. Indeed, his speech on May 4 where Mbeki specifically related the current problems in Zimbabwe to the legacies of colonialism, in this persp ective, directly contributed to the 'collapse' of the rand. A feeling of cynical satisfaction (we-knew-all-the-time-that-blacks-could-never-manage-the-sophisticated-economy-of-South-Africa) was all too evident in the readings that the South African econo my had finally achieved its long predicted consummation - a Seven to Eleven (the trade name of a convenience chainstore) economy, meaning seven rands to a dollar and ten rands to a pound. The rand, always on the downslide in this perspective, began to sl ide down even more rapidly following the Good Friday summit where Mbeki failed to meet the expectations of the 'international community' and take a strong line against Mugabe; and finally 'went down the tubes' (a typical South African usage) after his Ma y 4 speech; and began to recover only when, answering questions in the National Assembly on May 10, Mbeki asserted that the government would not allow any illegal land occupations in South Africa.

The preoccupation with the exchange rate of any country's currency is a legitimate concern of its central bank; and with rather more dubious intents, of the stock exchanges and currency speculators. But in South Africa the issues are projected as the ver y essence of economic reality. That the exchange rate is only one of the mechanisms in the complex matter of managing the economy, that the so-called adverse rates of exchange in relation to 'stronger' currencies may be, indeed in many cases are, an adva ntage for certain aspects of economic activity, is seldom explained. Rather, the other side of the gloomy prognosis of such analysts over the'rand going down the tubes' is the nostalgia for the good old days when one rand fetched two dollars, though of c ourse all of them agree that apartheid was bad.

The fact is that the South African economy is doing splendidly, thank you, insofar as industry and business are concerned. No government could have followed a more business-friendly policy than the African National Congress-led government. Here is a part ial listing, from a recently published analysis of post-apartheid South Africa's political economy (Elite Transition: From Apartheid to Neoliberalism in South Africa, by Patrick Bond, University of Natal Press, 2000) of the business friendly initi atives taken by the ANC government's economic team headed by Finance Minister Trevor Manuel: Sticking firmly even when all its targets except inflation were missed to 'Gear', the macro-economic policy - Growth, Employment and Redistribution - adopted in mid 1996, by when, to quote from another acute analysis (South Africa: Limits to Change: The Political Economy of Transformation by Hein Marais, University of Cape Town Press, 1998) "the ANC government's economic policy had acquired an overt class character, and was unabashedly geared to service the respective prerogatives of national and international capital and the aspirations of the emerging black bourgeoisie... at the expense of the impoverished majority's hopes for a less iniquitous social and economic order." Leaving VAT (value added tax) intact on basic goods and amplifying (especially in 1999) previous tax cuts favouring rich firms and rich people. Implementing real (after inflation) cuts in social spending while being eager to repay (' fanatic willingness') the odious apartheid era debts. Restructuring state pension funds to benefit old guard civil servants. Allowing Anglo American, Old Mutual and the South African Breweries, three of the country's largest corporations, to shift their headquarters to London. Liberalising foreign exchange and turning a blind eye to capital flight. Granting permission to 'demutualise' two big insurance companies. Failing to regulate financial institutions more aggressively; and several other initiatives .

IN contrast, the majority of the people continue to get the rough end of the stick. The immediate focus of the one-day general strike (stayaway) on May 11, the culminating action of a campaign of mass action that began on January 31 launched by the Congr ess of South African Trade Unions (Cosatu), was job losses. However, the broader focus of these protests has been against the orthodoxy of the market that has been at the root of the new economic policy, dictated by the supposedly inexorable forces of gl obalisation and liberalisation. The resounding success of the strike showed that the 'consensus' that is being sought by the government and industry on the fundamental issues of the economy quite simply cannot include labour. Any kind of a 'new deal' is simply not on, not because of the intransigence of labour but because the very definitions and limits set to this new deal discriminate heavily against the working class.

Consider, for instance, the issues of job creation. The free market approach encapsulated in the macro-economic policy of 'Gear' has meant in essence the reduction and ideally abdication of the role of the government in economic activity. This has necess arily entailed, among other things, the restructuring of administration and privatisation of government assets, both leading to massive job losses. This, in a situation where around 40 per cent of the 14 million-strong workforce is already unemployed.

Who will create jobs? How can jobs be created? The solutions offered simply take one round and round in circles. In a notable interview early this year, Finance Minister Manuel plaintively said that he wished someone would tell him how the government cou ld create jobs. The plaint was really disingenuous because no one, certainly not the unions, have been asking government to create jobs; rather, the demand is that the government put in place policies that would lead to the creation of jobs. It simply ca nnot abandon its interventionary role in key areas such as job creation.

This means challenging the even more strongly entrenched orthodoxy of the business. Jobs, in this view, can only be created through wealth creation. Indeed, leaders of business make no bones that the real function of business is to create wealth, not job s, which, once wealth is created, duly follow. Another crucial linkage in this process of wealth creation which will create jobs is foreign investment. Crucial to this wealth creation is foreign investment, which alone can ensure growth. Of course, in or der to attract foreign investment, the environment in the country should be 'investment friendly' meaning that the supposedly 'rigid labour market' has to be replaced by a 'flexible labour market'.

In other words, the strike was as much over the immediate issue of loss of jobs and need to create jobs as about the broader direction of the political economy. The debates are not foreclosed, despite urgings to do so by business and the media uniformly hostile to labour.

One example will suffice to illustrate the latter; and also bring to the fore perhaps the most fundamental issue at stake in these confrontations and debates. Addressing a May Day rally in Johannesburg, the ANC's secretary-general, Kaglema Motlanthe, spo ke about capitalism (he could hardly avoid the subject, considering that he was addressing a May Day rally) and urged the assembled workers to "intensely hate capitalism and engage in a struggle against it as there will always be exploitation in a capita list system". This call truly scandalised the media, for how could the ANC secretary-general say such things which question 'private property rights' when the ANC government is wooing capital, international and domestic, to invest in South Africa? Capita l itself, both international and local, seemed to take these remarks in their stride.

In speaking thus of capitalism, Motlanthe was merely reiterating a perspective linking capitalism to apartheid. The new orthodoxy rejects this linkage even though this was a cardinal principle of the anti-apartheid struggle and has been established in se veral economic histories and other scholarly studies.

However, the new orthodoxy, and the contorted linkages between what Mbeki said or did not say about Zimbabwe and its supposed impact on the rand and the economy as a whole make sense if seen as part of a broader agenda to distance the liberation struggle from its historical roots, in particular the active engagement of the Left both inside South Africa and internationally in that struggle. The ultimate objective of such an exercise is the delegitimisation of the liberation movement as a whole, to ration alise and facilitate a de facto recolonisation, a process that is going on under various guises in all erstwhile colonies and imperial possessions. It is for this reason that every demonstration of labour militancy, every challenge to the new orthodoxy of the market, is accompanied by gloating expectations that this time the unions and the Left have bitten off more than they can chew; that this time the tripartite alliance will surely collapse - a necessary condition in this perspective for South Africa to return to a state of normality.

The inescapable fact, however, is that South Africa, six years into democracy, is hardly a normal state, the overwhelming majority of its people nowhere near to feeling that they are able to live normal lives. The rampant criminality that is the most vis ible aspect of this intolerable situation is only the other face of the acute economic distress of the majority of the people, caused by unemployment and unequal distribution of resources. Indeed, the concern in South Africa about the developments in Zim babwe is really about what these may portend to the even more iniquitous land relations in this country. But then, as the old Chinese saying goes, the wind will not cease even if the tree wants to rest.