The Uncertain Shape of Post-Apartheid South Africa

— Patrick Bond

South Africa’s first democratic election, shortly after this magazine goes to press, will have produced an ANC-led government of national unity. Yet the overriding sense of harmony and reconciliation between the liberation movement and its National Party oppressor is extremely misleading. The threat to stability is not primarily from far-right white Nazis and Inkatha impis (warriors) who, it is feared, can physically destabilize a region which they have had two decades of practice ruining. Deep down even more divisive ideological currents are grinding against each other.

Set aside, in fact, the images which have this country degenerating into a Bosnia. Outside Natal, life in the black townships, however degraded and overlaid with the expectation of violence, continues even when the ever-fragile peace breaks down. Meanwhile, the violence spills into Johannesburg, Durban and Cape Town streets only very rarely.

Set aside, too, the images of South Africa promoted by Clinton, Ron Brown and the multinational corporations for which they run interference these days. South Africa is not their “gateway” to an impoverished Africa, nor is it a particularly good market to do anything much more than petty franchising deals. The post-apartheid economy will boom for a year or two, following from an extraordinary period of sustained depression, but more durable crisis tendencies are set to re-emerge as South Africa is integrated into the world capitalist economy.

And, most commentators will confirm, set aside any hope of gaining a detailed understanding of the balance of forces – because fluidity is the only constant at the moment. What can we say for sure, then, about the present and the immediate future? Who will guide the strategy of the left, and in what directions?

The profound contradictions notwithstanding, there are practically no left activists or strategists who argue for an insurrectionary rupture in the short-term. The historic standoff between the two great social forces which did battle since the early 1980s – the apartheid system and the ANC-aligned “Mass Democratic Movement” (MDM) – appeared to be resolved through social democratic economic compromises backed by a diluted, half-baked bourgeois democracy. Which players can shift this seemingly inexorable centrism?

* The South African Communist Party, historically-twinned to the ANC, but whose role now depends upon which of the SACP’s three primary fractions – the social democratic (even post-Marxist), the Stalinist residue or the radical-democratic New Left – is ascendant in the coming period.

* The COSATU trade union federation, whose staff are still immersed in corporatist “post-Fordist” deals [i.e.”team concept”-style cooperation with anagement – ed.] while shopfloor militants encourage a wave of wildcat strikes.

* The community-based “civic” affiliates of the two-year old South African National Civic Organization (SANCO), whose leaders have flirted with unrewarding corporatist politics but whose best activists are channeling the upsurge of grassroots confidence into land invasions and construction-site occupations.

* And student/youth, women’s, small business, rural and non-governmental development organizations, which are advancing fairly progressive policy principles in sector after sector.

A few other players are worth noting. Two other black political parties – the PAC and AZAPO – once vowed to contest ANC hegemony, but have fallen back into incoherence (even if the PAC made impressive electoral inroads in Cape Town and the Eastern Cape).

On the hard left, a “Workers’ List Party” was hurriedly formed by the Workers Organization for Socialist Action (WOSA) and quickly gained access to $57,000 in government campaigning resources. Neville Alexander, the foremost ideologue of WOSA and champion of the electoral strategy, attempted to capitalize on widespread latent support for such a party indicated by a questionable newspaper poll and a resolution by the giant metalworkers union at their 1993 congress.

But several leading WOSA comrades, including well-respected former general secretary Carl Brecker, split publicly from the organization on grounds that “WOSA has totally misread the mass mood, and failed to understand the trajectory of leftward moving militants in Congress, PAC, AZAPO, etc.” Brecker and several small revolutionary parties are now giving the ANC “critical support.”

One reason for such support, notwithstanding the ANC’s awesome political compromises, is the ANC/ MDM Reconstruction and Development Programme (RDP). It’s a policy program far less ambitious and radical than the inspirational Freedom Charter, which thirty-nine years ago highlighted proto-socialist goals such as nationalization of banks and monopoly capital.

What is of greater importance than such a comparison, however, is to explore the openings RDP presents for meeting all South Africans’ basic needs through radical democratic development strategies which in the process empower civil society.

Such openings depend upon whether South African state elites – both the emergent black bureaucratic bourgeoisie and the National Party’s “verligte” (enlightened) Afrikaner leaders – recognize the dangers ahead. Given the insurmountable structural economic barriers to conventional growth strategies, it would be suicidal to leave the MDM organizations with high expectations of meeting universal basic needs, only to experience a flimsy social democracy or worse, a neoliberal, free-market denouement.

There are indeed advocates of such approaches within and around the ANC/MDM, who would leave the broad outlines of the economy intact in the name of social stability. It is a dangerous gamble.

Social democrats point to Chile in 1989, Turkey in 1985, Spain in 1976 and Venezuela in 1960 for evidence of political democratization combined with social contracts and non-populist macroeconomic policy. In each case economic growth was present before, during and after the transition.

Growth is South Africa’s missing ingredient in this formula. The $110 billion South African economy – once able to provide unending agricultural products, gold, a host of other minerals, and high-quality manufactured goods – recently fell into the longest depression in its history (early 1989-late 1993). Indeed the economy has suffered a severe structural crisis dating to the early 1970s.

Today more than half of the country’s potential workers are unemployed and there exist real fears that South Africa’s assimilation into the world economy, hastened by huge GATT-induced tariff reductions, will be traumatic. It is hard to imagine a worse time to attempt a transition to democracy.

Not so, say the social democrats. Located mainly in the ANC Department of Economic Planning, their RDP arguments center on institutional reforms in the context of stabilizing “macroeconomic balances.” South Africa is ready for a roaring come-back, they argue optimistically.

In part, say the social democrats, business confidence is now bolstered by the combination of free market disciples in the formerly Afrikaner-welfarist National Party (NP) government (especially President F.W. de Klerk, Finance Minister Derek Keys and Reserve Bank Governor Chris Stals) and several moderate economists – Thabo Mbeki, Trevor Manuel, Tito Mboweni – who have risen to high positions in the ANC. Months prior to the election, polls showed president Nelson Mandela garnering two-thirds of business executives’ political support, with a third to De Klerk and none for Inkatha’s irascible Gatsha Buthelezi.

Renewed business confidence in a capitalist future is also based on the constitutional deal, which is peppered with clauses constraining any of the ANC’s remaining populist instincts. These include substantial devolution of powers from central government to nine new provinces; local governments which retain vastly disproportional white seats through 1999; and a Reserve Bank that will claim independence from democratic influences while implementing harsh tight-money policies. Existing (i.e. mainly white) civil service jobs and pensions are guaranteed for five years, and property rights feature strongly in the Bill of Rights.

But even if there were no political curbs on redistribution of wealth, economic globalization is having the same effect. Among future powerbrokers, consensus exists on the need for increased manufacturing exports, East Asia-style. A Structural Adjustment Programme in all but name has been in place for nearly five years, and the International Monetary Fund (IMF) gave approval to the NP government’s Value Added Tax, deregulation and privatization (or in many cases commercialization) programs, and high real interest rates. The IMF calls openly for negative real wage growth.

The World Bank is pleased enough with developments to project 6% annual GNP growth by 2000 – and a sustained 4% thereafter – in its most favorable scenario. Several billion dollars in World Bank loans are lined up, awaiting consensus on sectoral needs, and other major foreign aid commitments are being finalized.

The IMF recently approved an $850 million line of credit, seen as crucial to South Africa’s implementation of a $5 billion debt rescheduling agreement with 160 international banks. Boasting a total foreign debt of just $17 billion (15% of GDP), down from $23 billion in 1985, South Africa is certified by establishment voices as “underborrowed.”

Overseas portfolio investors, liquid to the gills with mutual funds, are already showing interest in the Johannesburg Stock Exchange (JSE). And foreign companies are establishing new franchising and licensing agreements. In the financial sector bank profits remain at record highs, JSE ratios have broken through all previous ceilings, and financial engineers are tapping billions for potential social investments.

Inflation has fallen to single digits after a spell of over 20% a few years ago. Liberalization of the dual exchange rate system is promised at the earliest opportunity.

The best agricultural season on record has pushed the devastating recent regional drought into remote memory. Manufacturing is picking up strongly, as is black consumer confidence. Huge investments in stainless steel, aluminum and diamond mining feature strong private sector leadership and partnerships with a supportive state. Nationalization is a concept of the distant past, and redistribution of white farmland is far off the agenda.

And consider the fact that the COSATU trade union federation is in crisis, according to the authoritative South African Labour Bulletin. Strike activity in 1993 was down 14.3% (from 1992) and wage increases barely broke inflation.

Big companies are increasingly cash-flush, and are seeking foreign markets and acquisitions with renewed vigor. As Business Day newspaper put it, “We are heading for an economic boom.” Some ambitious business thinkers now actually look forward, with some confidence, to the transfer of a rickety but still potent state apparatus to an eighty-two-year old black nationalist movement, wiser with age, less impatient, more reasonable.

But what happens then? We’ve just exhausted the capitalist good news scenario, and this required a bit of a stretch. When social democrats and neoliberals point to World Bank funding commitments, radicals respond by asking what the actual (adjusted interest rate) cost of a World Bank or IMF loan is, given the rapid devaluation of the S.A. currency (answer: nearly twice the cost of a local loan). Or when the JSE is celebrated as an emblem of investor confidence, skeptics point out that price/earnings ratios reflect far worse overvaluation than in 1929 or 1987.

Moreover the neolib/soc-dem consensus on export-led growth is innocent of rigorous marketing studies. Currency liberalization would result in massive capital flight, by all accounts. Nearly every piece of orthodox good news in this economy reflects either myopia or disguises a deeper, more disturbing story.

We can expect far more political turmoil in the first months of democratic rule and many more economic headaches than indicated by the variables just listed, upon which so many in the Change Industry find it pleasing to dwell.

Fiery social movements are now beginning to test their voices. Indeed the first months of democracy could witness further wildcat strike waves and land invasions, both of which have become commonplace in 1994. There will be intense pressure to raise government spending beyond the present 35% of GDP, especially if the “apartheid budget dividend” is lost to the even greater requirements of new provincial administrations.

Then there is formidable foreign competition. South African exporters get little joy from GATT, because Washington has denied Pretoria’s negotiators developing country status and, in fact, is examining South Africa carefully for violation of anti-dumping laws. When in July South Africa’s GATT offer is finalized, massive job losses will flow from deep cuts in protective tariffs for automobiles, clothing, textile, agriculture and other industries regarded as overly-coddled. The World Bank predicts GATT will cost South Africa $400 million annually in lost trade revenues by the time it is fully operational in 2002.

South Africa has an approximately $13 billion foreign exchange exposure through the finrand dual exchange rate system, which is costing $2 billion a year to service (this in addition to the $17 billion apartheid debt owed to foreign bankers). Meeting an additional $2.35 billion in foreign debt repayments this year – along with the usual flow of payments for luxury goods imports – is no joke under the circumstances. South Africa cannot be considered “underborrowed” with such balance of payments headaches. Today foreign currency reserves buy less than a month’s worth of imports.

A stunning revival of private sector net fixed investment from present levels is quite unlikely. The official manufacturing capacity utilization rate (78%) does not take into account a large number of plant closures which could be reversed if circumstances permit.

Hence the existing unused private sector capacity will not permit anything like the 16% net fixed investment of the 1970s, not for several years (last year net fixed investment was 1%). Most new investment is in the form of state-backed capital-intensive mineral beneficiation schemes, which create virtually no new jobs.

Radicals have made these points, rather quietly, but until the publication last December of Making Democracy Work: A Framework for Macroeconomic Policy in South Africa by the Keynesian economists of the ANC’s Macroeconomic Research Group (MERG), it has been hard to sustain even meek demand-side policy recommendations. While firmly social democratic, MERG is a direct rejoinder to the neoliberal, supply-side Normative Economic Model of National Party Finance Minister Keys, and represents the most rigorous book on the South African economy to date.

True enough, left and green economists will judge MERG a let-down at first glance. Nevertheless, the MERG program, which was profoundly influenced by leading British Marxists Ben Fine and Lawrence Harris (as well as by a few American institutionalist economists), has set the stage for interesting struggles between neo-liberals, social democrats and radicals.

MERG has been derided by bourgeois observers for suggesting “loony left” financial market interventions like Reserve Bank nationalization, a People’s Bank based on the Post Office Savings Bank infrastructure, prescribed assets for insurance companies and pension funds, and capital market controls. Yet MERG stops far short of the Freedom Charter program, arguing against “dismantling the conglomerates.” Skews in industry are targeted and export prospects (minerals and metal goods) identified.

MERG’s proposed reforms of import protection and export support are unremarkable, and generally support increased exposure to international competition. Partly as a result, even the Keynesian MERG model projects insignificant job creation in coming years.

Neville Alexander explains the context in which MERG became the primary left program until the more radical RDP was formulated: “There was a rapid shift [in the early 1990s] from a militant quasi-socialism to a common or garden ’democratic’ capitalism. This is why the ambiguities of the Freedom Charter, which in the past had conveniently united the Congress Movement in an illusory populist coherence, had to expunged. Everything became negotiable: ’nationalization’ has given way to the ’mixed economy,’ the unitary state can now encompass elements of federalism, ’majority rule’ now means 67%.”

How, then, are radicals in COSATU, SANCO and other working-class formations responding to the opportunities for, at best, a corporatist export-oriented growth deal which even if successful will leave out a good 70% of their constituents? Many of COSATU’s thinkers publicly endorse corporatism (including Jeremy Baskin, author of the Verso book Striking Back), with some COSATU post-Fordist intellectuals lining up to the right of the World Bank on trade liberalization. Such ambiguity is a passing phenomenon, many radicals pray.

Of more potential, some would posit, is the growing movement to “People-Centered Development” (SANCO’s main slogan), which is catching on like wild-fire as civic activists, women’s leaders, rural advocates and NGO strategists come to grips with the need for an alternative to the status quo variations of the neo-liberals and social democrats.

Women, for instance, are making their voices heard in development debates as never before, to the extent of shouting down right-wing attempts to cement the patriarchy of tribal traditional leaders during the recent constitutional negotiations. Women’s access to rural land, to urban housing, to health and education are all on the agenda as a result of real struggle, though much more work remains.

Grassroots community organizations have the greatest potential to advance people-centered development, because of their class location with one foot in the privileged “insider” group of urban workers and the other in sprawling peri-urban shack settlements and rural communities. The civics have, as a result, attracted earnest attention from the profoundly neoliberal U.S. Agency for International Development (US-AID); SANCO’s radical demands for social justice do represent a serious threat to the status quo in the medium-term.

The terrain of these struggles has become quite sophisticated. For US-AID, the State Department and Council on Foreign Relations, the rise of “civil society” discourse offers an opportunity to impose structural adjustment programs through standard state-shrinking, in which the metropolitan scale ultimately emerges as a more readily accessible unit of analysis and control than the nation-state. In contrast to the healthy South African slogan, a “strong but slim state,” the neoliberal project often entails bloating a weak state with unneeded foreign debt. This means assuring the class formation of a bureaucratic bourgeoisie, and hence wrecking the state through a formal Stuctural Adjustment Program (a condition some progressives have termed “low intensity democracy”) so that export-led growth can be more effectively managed at the urban scale.

In this context ideological debates within the urban social movement are fascinating. Mzwanele Mayekiso, president of Alexandra Civic Organization and international representative of SANCO, argues for an explicitly working-class civil society. This statement of a grassroots, implicitly socialist goal aims to help the civics resist attempts to collapse them into a vague  liberal project that would absolve the state of responsibility for providing its subjects sufficient resources to lead decent lives.

While not all activists wear a socialist label as comfortably as Mayekiso, this “watchdog” philosophy pervades the RDP. The program itself hovers between social democracy and a quite radical people-centered development approach, with a few neo-liberal concessions thrown in. Major gains in ANC policies were achieved during extensive workshopping of the RDP: reproductive rights, a strong primary health care commitment, affirmative action, and expanded labor rights.

Housing is a good example of the anti-capitalist potential of the programme (the RDP policy was generated mainly by SANCO). “The housing problems created by apartheid and by the limited range of the capitalist housing markets have been aggravated by the absence of a coherent national housing policy,” the RDP argues. Decent shelter for all is to be guaranteed, and government subsidies are to aim to decommodify housing so that it does not become subject to market speculation.

Addressing the oligopolistic construction and building materials industry, the RDP promises support for “public, worker and community-based ownership where the market fails to provide a reasonably priced product.” And the banks come under sustained attack: “`Redlining’ and other forms of discrimination by banks must be prohibited. Community-controlled financing vehicles must be established with both private sector and government support where necessary.”

In the RDP, if not in its practice, the ANC also acknowledges the specter of the World Bank, and takes pains to avoid a future Third World debt trap: “The RDP must use foreign debt financing only for those elements of the program that can potentially increase our capacity for earning foreign exchange. Relationships with international financial institutions such as the World Bank and International Monetary Fund must be conducted in such a way as to protect the integrity of domestic policy formulation and promote the interests of the South African population and the economy.”

In sum, as the basic framework for ANC governance, the RDP should be viewed as something of a victory for left forces within the MDM, notwithstanding surrender on export-led manufacturing growth and a slow-growth budget. These are not trifling flaws, as many of the upcoming conflicts over RDP implementation boil down to the simple question of whether the South African economy can afford to subsidize the jobs, houses, education and health care so that all citizens gain access to such basic need items. The answer to this question is largely one of political power relations, of course. But at a technical level radical economists point out that the RDP is affordable if certain structural shifts towards a sustainable, basic needs growth strategy occur.

Ben Turok, for example, who heads the ANC’s reconstruction and development team in the Johannesburg province, has argued strongly for a freeze on local production, as well as the importation, of luxury goods.

Turok, who has ministerial status in Johannesburg, has thus become an even more attractive whipping boy for the capitalist press than Joe Slovo and the Communist Party (with whom Turok has had a falling out). He was even the subject of a recent tirade by Pik Botha, who argued in an election debate with Thabo Mbeki that Turok’s periodic attacks on the IMF would do irreparable damage to South Africa’s reputation amongst international bankers.

If, in other provinces, the left can follow Turok’s example and ensure that the provincial-federal system we have all dreaded comes replete with some silver linings, this could generate a great deal more popular confidence and actual delivery of the goods than most cynics would imagine is possible.

Indeed, if Turok and national RDP Minister Jay Naidoo establish a no-nonsense basic needs strategy, characterized by huge transfers of RDP capacity-building funds for people-centered development, then there will be a great deal of space in which the left can operate. Perhaps WOSA’s Alexander put it best (just prior to the divisive Workers’ List initiative): “Even though we have no reason to be sanguine and simplistic about the contested terrain of civil society, the existence of which in no way can guarantee a successful process of democratization, it seems to me that it is in this sphere that we need to concentrate our efforts. In the end, only the independence of these mass formations “their financial independence, their commitment to non-sectarian practices and to the principles of participatory democracy – will carry us over the period of potential erosion of the gains that were made in the ’70s and the ’80s.”

If a more radical approach to South Africa’s political-economic future is to gain currency, it will be a function less of convincing a new class of social democratic bureaucrats, or of disproving the neoliberal policy papers being churned out by the think tanks of the World Bank and its local allies. Instead the struggle for a democratic economy in South Africa rests largely upon the capacity of the best comrades in MDM structures to maintain a vision of social justice in the face of narrow social contract opportunities and incorrect technocratic arguments to the contrary. The international support of a once-formidable anti-apartheid movement should now be focused on precisely these sorts of struggles within the struggle.

ATC 50, May-June 1994