Dear SASCO Member
For your information, please find below an article that appeared in our
March Edition of Umsebenzi in relation to the Global Economic Crisis.
This is an edited extract of the February 2008 Political Report to the
Central Committee. I hope this will help you to take forward you debate
and criticism of the SACP Central Committee positions.
Regards
*How should SA Respond to the Capitalist Crisis? *
/This is part of the Political Report to the February Central Committee:/
Official confirmation that 36,500 jobs have been lost in the mining and
auto sectors since last July, and that SA’s economy shrank by 1,8% in
the last quarter of 2008 – the biggest drop in 16 years – have
underlined the point the SACP has been making consistently. Despite
boasts that we were still hearing just a few months ago, SA’s economy is
actually very vulnerable to the present global crisis.
It is true no economy in the world is likely to escape the negative
effects of the meltdown. It is also true that SA is not the most
vulnerable of economies. Nonetheless, we have a degree of exposure that
could have been considerably less if correct policies had been pursued
after 1994. Much of the blame for our current exposure must lie with the
failure to transform the systemic features of SA’s capitalist economy.
For over a hundred years, the SA economy has been excessively dependent
on primary commodity exports. This dependence has been driven by (and
has resulted in) a very high level of concentration and dominance over
our economy by the big mining houses, closely linked to the major
financial institutions. This is what we refer to as the domination by
the “mineral-energy and finance” complex. This high level of
concentration and domination has served, generally, to choke off
effective and balanced development in our manufacturing sector. As a
result, our economy is also excessively reliant on imports of luxury
goods and capital goods (machinery and technology).
Despite SA’s relative levels of development, we have many of the
features of a classical neo-colonial economy. We are highly exposed to
volatility in the “commodity” markets (i.e. on global demand for our
minerals – gold, platinum, iron ore, coal, etc.). When there is global
recession, our exports and our job market are heavily hit, as at
present. But even when there is a commodity boom (as there has been over
the past several years), growth in the SA economy sucks in luxury and
capital goods imports. And, since the terms of trade between primary
commodities (which we export) and luxury and capital goods (which we
tend to import) are largely unfavourable – our trade balance has long
been a point of serious vulnerability, even in good times.
To compensate for this balance of payments vulnerability by attracting
foreign money into SA, the Reserve Bank and Treasury have maintained
relatively high interest rates. But these relatively high interest rates
have, in turn, further served to constrain economic development in our
country, particularly in the critical labour-intensive manufacturing,
small-scale farming, and service sectors. What is more, the foreign
investments that we have tended to attract have been largely speculative
“hot money”. To further create an “investor friendly” climate we have
also liberalised our trade regime (far beyond what was required of
developing countries), and we have relaxed exchange controls (26 times
since 1996), leaving only residual control measures in place.
All of these interventions, which were designed to attract foreign
capital into SA, have tended to have the perverse effect of encouraging
major SA companies to disinvest out of SA, to de-list from the JSE, or
to establish secondary listings in London and New York. At present, the
major contributor to our current account imbalance is not so much our
imports, but the major outflow of dividend payments to shareholders in
the US, UK, Europe, etc. This problem is now being made worse by the
outflow of “hot money” from all developing economies (including SA) back
to the developed economies. This, too, is perverse. It is, after all,
the economies of the advanced capitalist countries that are particularly
affected by the present recession. It underlines the fact that, despite
all the rhetoric about “free markets”, and global liberalisation,
imperialism remains a dominant reality. When the chips are down, the
major US and UK financial institutions headquartered in the North
pull-back and seek to save their own economies first.
Where does that leave us now?
The very first step is to acknowledge that, despite so-called
“unprecedented” and “sustained” growth since 1994, and despite the
recent global commodity boom, the growth path upon which our economy has
been located over the past 15 years has failed. It has failed to create
jobs in sufficient numbers. And it has failed to dent the legacy of
gross inequality in our country. It has left us vulnerable.
Faced with the crisis we have to follow a two-track approach:
· We need to introduce immediate *defensive *measures; and, linked to these
· We need to pursue an *offensive* strategy that begins, progressively,
to transform our neo-colonial capitalist growth path.
Defensive measures
The Nedlac Task Force’s “Framework for a South African response to the
international economic crisis” begins to provide an important outline of
immediate defensive measures. We will need to consider some financial
assistance to key strategic industries, in exchange for firm commitments
to job protection. However, we simply do not have the resources to
remotely match the scale of bail-outs in the advanced capitalist countries.
Instead, as the Nedlac Task Force recognises, we will need to focus
largely on non-financial support measures, among them:
* Trade remedies – tough anti-dumping measures; countervailing
duties; judicious application of new tariffs (for which there is
space in terms of WTO rules); more vigorous policing of our
borders to deal with illegal imports;
* Vigorous promotion of the Proudly SA Campaign – and securing
procurement agreements in terms of it.
Offensive measures – transforming our growth path
Fortunately, as a result of protracted struggles from within the ANC-led
alliance, we have begun to see important policy shifts in government. In
particular, there is now an appreciation that the democratic state has
to be an active player in the economy – as a planner and as a leader in
developing an industrial policy (working together with social partners
in what is a mixed economy); as an investor through the budget and
through development finance institutions (like the DBSA, Land Bank, and
IDC); as a job creator and employer; and as a driver of infrastructure
investment through strategic SOEs. Economic development and
transformation cannot be abandoned to market whims.
This is what we mean by a democratic developmental state in the South
African reality.
And it is this kind of developmental state – that we are now beginning
to see in practice – that is protecting the SA economy from the very
worst of the global melt-down. It is no accident that the key sector of
sustained growth in an otherwise generally gloomy South African picture
remains construction – thanks to our massive state-led infrastructure
programme.
It is also no accident that this year’s budget has a strategic
orientation that is different in emphasis from the “stimulus” packages
emanating from the US and other developed economies. Our 2009/10 budget
seeks to sustain major infrastructure spending over the coming years. It
envisages a major increase in public sector employment (teachers,
health-workers, police), and the massification of the expanded public
works programmes. It also commits to sustaining and extending the
already extensive (if patchy) social security net.
In the advanced capitalist countries, the political response to the
meltdown is fundamentally to rescue failing companies by providing
greater state-backed liquidity. There, governments are stepping in as
“lenders of last resort”. In SA, the emphasis is on the state as a
“producer” and even as an “employer of last resort”. For the SACP, we
hope to consolidate this trend, pointing out the appropriate lessons to
be learnt from the current global capitalist crisis and its impact on
our society. In the longer run, only a socialist economy will be able to
place SA on a sustainable development path. And a socialist economy is
one in which the broad public sector (including cooperatives) is the
producer and employer not just of last resort, but increasingly also of
FIRST resort.
There are welcome policy shifts, but are they enough?
In generally welcoming the 2009/10 budget, as the SACP has, there are
also some flashing red-lights that we need to heed. While Cde Manuel’s
budget speech struck many positive notes about getting the productive
economy, including agriculture, working more effectively, some of the
broad spending trends suggest a different story.
The budget allocation for the Department of Trade and Industry actually
decreases (2008/9 – R6.36bn, versus 2009/10 – R5,7bn), and that of
agriculture is also marginally down (2009/9 –R2.82bn, 2009/10 – R2,79bn.)
Admittedly, headline figures like these do not necessarily tell the full
story. A decrease might mask the reallocation of funding to more
strategic programmes within departments. In the case of agriculture, a
revamped and dynamised Land Bank should be able to spur transformation
with funding that is off the national budget, for instance.
Nonetheless, concern about the degree of clarity on the transformation
of our productive economy is further deepened by some of the more
general strategic points announced by Cde Manuel in his budget speech.
For instance, he said the budget was guided by “five enduring
principles” – the fourth of which was: “/Addressing the barriers to
competitiveness that limit equitable sharing opportunities”/. Certainly,
the collusive and/or market-dominant, rent-seeking conduct of the big
corporations in our country (particularly those in the mining,
financial, energy and agro-processing sectors) has reinforced our
neo-colonial growth path. This “uncompetitive” behaviour has certainly
undermined labour-intensive light manufacturing and small farming, for
instance. The work of the Competitions Commission is important in this
regard. But it would be a grave error to reduce industrial policy to
“addressing the barriers to competitiveness” as Treasury sometimes tends
to do. It would be an even greater error to imagine that a more
competitive environment would somehow create a more equitable and
sharing society.
Are we actively transforming our neo-colonial growth path…or getting
ready for the next commodity boom?
We have to use the current crisis as an opportunity to place SA on a
radically transformed growth path – in which there is:
* A much more balanced development across sectors, with a particular
emphasis on labour intensive sectors like light manufacturing,
small farming, and low-end services;
* A greater focus on our domestic and regional market;
* A greater focus on South-South trade;
* A preparedness to introduce trade and financial measures that
protect our own key sectors – including tariffs, tighter control
over importers, and more effective financial flow controls
(including speed-bumps on the movement of hot-money and dividend
payouts to foreign shareholders).
* A comprehensive and critical review of the compradorist and
parasitic features of narrow BEE. Some 80% of BEE deals are now
under the water as projected dividend and share-value earnings
have crashed. Many of these deals have the makings of a local
sub-prime crisis.
* A macro-economic policy package that supports this overall
strategic focus and ensures longer-term sustainability.
In welcoming the many important shifts that have occurred in economic
policy, we need to continue coming back to the underlying strategic
question – what exactly are we trying to do?
Is our continued commitment, for instance, to state-led infrastructure
development fundamentally about the transformation of our historical,
neo-colonial growth path? Or are we building rail-lines, airports,
freeways, ports, electricity-generation capacity, and publicly-owned oil
refineries so that we are ready to offer a “competitive” environment to
the same bunch of multi-nationals when the next commodity boom comes
around?
It is not clear that a vision of long-term transformation is yet
sufficiently shared within our country, or even within our Alliance. The
consolidation and implementation of a coherent transformational economic
programme has now become the critical challenge of our time.
THIS IS A CAPITALIST CRISIS – OUR ANSWER IS:
TOGETHER, LET US TRANSFORM SA’s NEO-COLONIAL CAPITALIST GROWTH PATH!
SOCIALISM IS THE FUTURE,
…TOGETHER, LET US BEGIN TO BUILD IT NOW!
sasco member wrote:
> Comrades
> Since the space is more broad and open for debate especially after
> Polokwane, I thought I should raise a question that seems to be taken
> lightly.
> Remember raising questions also means raising those that we may not
> want to see/hear raised.
> Ok process aside. Let me ask my question.
> The status quo organisationally is that the GS of the Party and
> several provincial secretaries have violated the Constitution of the
> Party including the NS of the YCL in terms of the YCL constitution.
> The violation in question is known publicly I need not raise it here.
> However thats not my primary concern. My primary concern and question
> is whether; as argued by Jeremy Cronin on national TV, the decision of
> the CC to endorse the decision of GS was consistent, correct and
> principled and effect does it have on the organisation as a whole? Was
> the decision of the GS to violate the constitution consistent, correct
> and principled?
> There is now talk of "conditions have changed" does that mean when the
> position of provincial secretaries was also made permanent/fulltime
> mean that it was expediency such that because "conditions then were
> different" it was an organisationally sound thing to make the
> positions fulltime? In other words was the decision of congress taken
> to build the Party in order to be changed later let alone violated to
> suit individual's personal choices? Or vice-versa, was it taken to
> suit individual choices even then?
> When the decision was taken was there no foresight into "conditions
> that would later change"? Because as communists would say; change is
> permanent.
> In any case what are these conditions that have suddenly changed? Is
> it the space that the communist party is now "having" as others are
> whispering. Ok, the space is there but to do what? Where is the Party
> perspective on the Global Financial Crisis? Because for me space means
> space to articulate and hegemonise ideas of the Party. So, the
> conditions changed for what? So that what can happen?
> I hope we work to find answers to these questions because, in future
> we must handle such matters differently. I also hope I wont be
> insulted like in the past when I raise questions that I believe must
> be raised in terms of the principle of "self-criticism"
> SM
>
> >
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