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PREFACE

In the pall of a destructive preceding political era under Jacob Zuma, characterised by corruption of the body politic and the institutions of our democracy and by poor economic performance, the president of the African National Congress, Cyril Ramaphosa, has promised a ‘new dawn’ for South Africa. He advocates that ‘… we put behind us the era of diminishing trust in public institutions and weakened confidence in leaders. We should put all the negativity that has dogged our country behind us, because a new dawn, inspired by our collective memory of Nelson Mandela and the changes that are unfolding, is upon us’ (Vuk’unzenzele 2018). We must ask what lessons have been learnt though from the political circumstances and policy choices made since democracy in 1994 in South Africa that require the arising of such a new dawn.

In contributing an answer, we feel an honest and forthright reflection is required of our recent economic and social policy-making history, in particular in the era of the democratic political transition between 1990 and 1996. Our book is therefore centred on the primary question that, given its historical state-led anti-inequality stance, how did the ANC in the 1990s come to do such a dramatic volte-face on economic and social policy and advocate for an essentially market-driven or neo-liberal approach. How did this U-turn happen? What were the forces that led the market-friendly charge? Indeed, as many have asked, did the ANC willingly go that way or was it pushed into such compromises?

We show here that the economic policy choices of the ANC leadership were based on a judgement that there was no alternative to the neo-liberalism that had dominated global policy debate since the early 1980s. Ironically, this approach, also referred to as the Washington Consensus, was slowly losing credibility following the publication of the Japanese-sponsored World Bank’s The East Asian Miracle report (1993c). That report was highly critical of the core economic and social policy positions that emerged out of the Washington Consensus. This rethinking globally on failed macroeconomic policy in the early to mid-1990s was happening at precisely the time when the ANC was entering negotiations with the apartheid regime over a democratic constitution and the accompanying institutions of a post-apartheid state. The ANC, however, entered this global arena of fierce contestation over macroeconomic policy strategies and ideas unevenly schooled in economic policy debates and in economic theorising about their history.

In contrast to the ANC, the apartheid state was able to turn to its well-resourced economic institutions and supportive state agencies, such as the National Treasury, South African Reserve Bank, the Central Economic Advisory Services, the Development Bank, the Land Bank and other state institutions, to confound the ANC with powerful, albeit flawed, neo-liberal ideas and policy proposals, which they had begun earnestly to espouse and implement from the late 1970s. In that exercise of persuasion and power play, the apartheid state had the implicit backing of Western governments and global financial institutions, as well as that of a still powerful local capitalist class.

Apart from ‘there was no alternative’, at least two other arguments are raised in defence of the ANC leadership’s neo-liberal choices. The first is that the state was in a fiscal crisis, so no alternative policy strategy could be entertained or financed based on a state-driven investment programme. The second was based on the view that implementing any state-led investment and redistributive social policy delivery programme would have relied on a largely untransformed apartheid state bureaucracy and would have been undermined by that old guard.

Some have questioned the degree and depth of the fiscal crisis in historical and comparative context (see Michie and Padayachee 1997, 1998; Fine and Padayachee 2000). By examining alternative, yet fiscally responsible, policy frameworks, such as the ANC’s own (later disowned) macroeconomic policy framework (MERG) and the Congress of South African Trade Unions (Cosatu) led Reconstruction and Development Programme (RDP), we show that the first view was fatally flawed. There were credible and imaginative policy alternatives, but they were not only eschewed, but imperiously discarded without deliberative debate within the ANC or its alliance partners. While we do not deal extensively with the second point referred to above, it is clear that this argument is something of a feeble cop-out. Surely, to be consistent with the culture of democratic accountability forged in the mass democratic movement, the right strategy was to agree, through democratic debate, on an appropriate, progressive policy framework, and then consider the kind of state capability needed to give effect to it? The outcome by now, 25 years later, we maintain, would have resulted in far more genuinely emancipatory outcomes for the majority of our people. That approach is what the Afrikaner nationalists did in the lead-up to their own racist version of freedom in 1948 and thereafter (see, for example, Freund 2019). After 1959, Fidel Castro’s Cuba did not throw up its arms in despair after inheriting Fulgencio Batista’s bureaucracy, but set about radically and purposefully transforming the civil service to give effect to their revolutionary goals. The South West Africa People’s Organisation was able to do this, too, in Namibia in anticipation of taking over government.

The example of Ethiopia’s recent development experience may be useful in setting the MERG state-led investment programme in some comparative perspective. Ethiopia’s impressive growth rates, which averaged 10 per cent per annum over the past decade after the global crisis of 2008, was driven by substantial public sector infrastructural investment. Ken Coutts and Christina Laskaridis (2019) show that contrary to the concern that high public sector investment would crowd out private sector investment, the latter kept pace with public investment, being lower than public investment (as a percentage of the GDP) in the first phase and appreciably higher in the second. The only concern raised by analysts was the risk of exposure to spiralling external debt, calling for careful management of the currency and reserves and policies aimed at increasing output and exports of both agriculture and industry (Coutts and Laskaridis 2019).

Over 30 years ago, the ‘largely and dangerously’1 ignored post-Keynesian scholar Hyman Minsky wrote: ‘Economic issues must become a serious public matter and the subject of debate if new directions are to be undertaken. Meaningful reforms cannot be put over by an advisory and administrative elite that is itself the architect of the existing situation’ (in Rapley 2017: 416).

This book eschews both singular and conspiratorial narratives about why certain economic and social policies were decided upon and adopted in this period. Instead, we favour an in-depth and ‘no-holds-barred’ account that contrasts and reflects on the ideologically varying vantage points of all the key protagonists in South Africa’s transition to democracy until approximately 1996 with the introduction of the market-friendly Growth, Employment and Redistribution policy framework. Without sacrificing our own voice, we have tried to give voice deliberately and fairly to all sides involved in the debates. But to understand the 1990s shifts, we felt the need to take a longer, historically grounded approach.

The book, therefore, locates the period of ANC economic and social policy-making in the post-1990 era against a wider historically contextualised canvas of ANC policy-making since the 1940s – commencing with African Claims of 1943 through the Freedom Charter of 1955, the 1992 Ready to Govern policy document, the RDP Base Document and MERG’s macroeconomic policy framework of the 1990s. This detailed contextual framework allows us to argue unequivocally that the historical policy orientation of ANC economic and social policy-making was firmly social democratic in character (even though, and with the possible exception of Albert Luthuli, not conceptualised in such specifically ideological terms).

Social democracy as applied here by us is located within a broad tradition of socialist thought characterised historically by the state-led universalised provision of public goods to all citizens and across social strata (such as a single state-run national health service provided free at the point of delivery), based on principles of social solidarity and inclusive social citizenship and with accompanying redistributive macroeconomic policies. In the indigenised social democratic policy strategy reflected in ANC policy thinking, historically the democratic state would play a critical and leading role in the reconstruction and development of South Africa.

It is instructive to acknowledge at this point that very shortly after its unbanning in 1990, the ANC was fully open to such bold, nuanced and imaginative social democratic thinking on policy alternatives, but that this impetus was rapidly eclipsed by an emerging residualist, market-friendly policy discourse that was eventually consolidated in the Growth, Employment and Re-distribution (GEAR) strategy of 1996. The openness to redistributive, social democratic policy thinking at this stage was represented by no less a commanding figure than Nelson Mandela in a seminal keynote address to the Consultative Business Movement on 23 May 1990 early after his release from incarceration (Mandela 1990). Here, in contrast to the tone and content of what was soon to follow from the ANC, is an open and flexible approach to economic policy options, albeit firmly anchored in the specificities of South Africa’s own history and legacy. Apart from the focus on education, housing, skills and social policy interventions, Mandela’s economic policy ideas as reflected in this 1990 speech are significant. He speaks of the need for a ‘macroeconomic indicative national plan’; the recognition of gross inequalities arising out of imbalances in concentrations of corporate power and land distribution; a proposal for strengthening economic democracy through, for example, state representation on private boards; a focus on employment and centralised bargaining; the need for anti-trust legislation and a more progressive tax policy; the importance of successfully competing in global markets; the imperative to build a small and medium business sector; a focus on investment, industrial policy and a living wage; registering opposition to the late apartheid era government’s policy of privatisation, and his concern about capital flight. He does not fail to recognise fiscal realities in his speech, though he clearly does not labour over or fetishise them at this stage. Most significantly, the ideas raised here by Mandela are all key elements of a redistributive, social democratic economic and social policy framework, closer, we argue, both to the original social democratic and emancipatory vision of the ANC as contained in its African Claims policy document of 1943 and the Freedom Charter of 1955, and to the vision articulated later in the Macroeconomic Research Group (MERG) and Reconstruction and Development Programme (RDP) in 1993.

Its historical alliance with the vocal and Marxist-Leninist-inspired South African Communist Party gave the appearance, however, that the ANC was ideologically more to the left of this position. The book describes how and why these social democratic policy alternatives were summarily abandoned through the new centralised and elitist leadership politics that gripped the ANC in the transition era, displacing the mass-based, democratic politics of accountability of the anti-apartheid era. Indeed, the consequences of this market-value-informed political elitism that took root in the mid-1990s was most eloquently expressed by iconic anti-apartheid liberation fighter and United Democratic Front (UDF) founder member, the late Johnny Issel:

Our public appearances are carefully choreographed. These are the requirements of the market. It demands that we present ourselves as saleable commodities. As functionaries we are required to possess a certain measure of exchange value, like any other commodity for sale. Such are the dictates of the ‘market’. And more better if it is ‘packaged’ in an Italian-designed suit and driven in a German-produced automobile. And if so, the exchange value increases and the market rewards a higher premium. But on the market not all goods up for sale are sought. Similarly, some of us discover that we are not appropriately packaged. And we begin to doubt our own worth, our own self-worth. Others seem to find somewhat more expedient ways, albeit criminal ways, to appropriate what the market has to offer (South African History Online 2011).

While the ANC clearly and correctly triumphed on the political front in securing a globally celebrated constitutional democracy, the egregious lack of attention to economic theory for most of its history, the lack of economic capacity within its ranks in contrast to the late apartheid state’s capacity and skills, the almost criminal neglect of its mass democratic base, and the summary rejection of the recommendations of its own progressive think tanks, including MERG and the RDP Base Document, all combined to cripple the ANC’s stance on economic and social policy from about mid-1993 and into the early democratic era.

We do not characterise these compromises by Nelson Mandela and the ANC leadership as some kind of ‘betrayal’ or ‘selling out’, as has become popular in some circles today. Yes, in our judgement there were many things the ANC could have done better, especially in respect of the way it cut itself off from its greatest strength, that is the mass democratic movement. But we accept that those comrades in leadership who took these policy decisions were genuinely convinced it offered the best hope for our people. In this respect, we cannot conclude on the basis of the evidence that there was a conscious and intentional ‘sell-out’ of the decades-long struggle to achieve an emancipated society in South Africa. Neither is there any conclusive evidence, apart from some speculation, of secret late night meetings involving the ANC, Western governments, the Bretton Woods institutions and local capital, which persuaded the ANC to adopt market-friendly economic and social policies. For us, the jury is still out on this point. The extensive available evidence we have reviewed could not substantiate such claims, yet we do not deny this possibility. Further research is needed before anyone can come to a definitive conclusion and it is our hope that our book will act as a spur to such research by interested scholars.

What is unassailable in our view, though, is that the values and principles of democratic debate, accountability and accompanying political selflessness, all key features of the progressive mass democratic movement in the struggle against apartheid, were near abandoned in the economic policy-making process of the transition era. This commitment, indeed insistence, on the need to deliberate and reach consensus on policy alternatives through our mass democratic political culture is reflected most tellingly in the views of Alec Erwin, then education officer of the National Union of Metalworkers of South Africa (Numsa), expressed at an Indaba with the ANC in Paris in 1989. Erwin said that ‘central to our thinking is the development of a democratic political process that will entrench mass participation and involvement in the formulation and implementation of economic policy’ (Erwin 1990: 206). We hold that there was a subsequent ‘sell-out’ of this commitment to a grassroots, mass democratic political culture informing the policy-making process. Apart from the impact on policy process and content itself, this shift has had devastating consequences for accountability, eroding the fabric of progressive South African political life and contributing substantively to the corrosion of the progressive body politic. The roots of this phenomenon, we argue, are to be found in the era of the political transition since 1990 and the early period of democracy following the 1994 elections, and then finally cohered and consolidated in the ruinous Zuma era.

In respect of economic and social policy and in the context of a ‘negotiated revolution’, the ANC was outgunned and outwitted by the far more powerful economic machinery of the late apartheid state and of local (white) capital. In our view, the role of the ‘international economic community’ in the form of the International Monetary Fund and the World Bank in explaining the ‘shift’ has been exaggerated, as has been conclusively demonstrated in a recent paper by Padayachee and Fine (2018). An elitist team was assembled and entrusted by the ANC leadership with creating the policy and institutional foundations for realising the Freedom Charter, the ANC’s long-term emancipatory vision for a South African good society. Through missteps and arrogance, that foundation could not be laid. We now live with the consequences.

Now, as we conclude our work in a post-Zuma South Africa, and with a new dawn based on a ‘New Deal’ being evoked by President Ramaphosa and his followers, there are worrying signs that none of the lessons of theory or history, or the lessons drawn from the vast post-2008 crisis literature, appear to have been learnt. It looks like ‘business as usual’ after the obscenely corrupt ten years of Zuma’s administration brought post-apartheid South Africa virtually to its knees (Van Niekerk and Fine 2019).

We wish to conclude though, again, with the observation of Issel, who after forcefully rejecting all the trappings of political elitism in the ANC in the final years of his life, had these words to say in his poignant and final public speech: ‘What spurred us on then – the need and urge for freedom – still burns within us and I think it will burn within us for a long time to come. And I want you to be strong comrades and don’t be distracted by anything … Let us continue moving on and finally I believe we shall see what we had fought for’ (YouTube 2011).

Shadow of Liberation

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