History Matters

Notes for an introduction to perspectives

by Rob Petersen

This article was presented to a forum in August last year iand was forwarded to History matters by one of our readers. It present a very interesting perspective on the world and South African situation and we hope that you will enjoy read on.

1. To the youth belongs the future – and youth we are not. However, memory (something regrettably lacking in the youth) is very important for freedom. There is a good bit of memory assembled here (not to mention brains); and in the current situation both hindsight and foresight must be brought to bear as best we can.

2. It is a very long time since I last agreed to lead off a discussion on perspectives – I think my hair wasn’t even grey then – and I’m probably crazy to do so now. Having mis-prepared people once, I am not in a hurry to do so again. The problem of perspectives is a problem of deep perplexity, and the lack of any fully convincing theoretical authority as a guide in radically new conditions.

3. I’m going to attempt what bankers might call a “high-level” analysis: you may consider its level to be rather low. The best I can do is advance a number of very condensed, more or less objectionable, more or less onesided observations, more as provisional assertions than proven conclusions, for your consideration. Whether they seem ultimately a patchwork rather than pieces of a coherent tapestry will be for you to judge, and I look forward to a vigorous debate.

4. My previous perspective on South African developments, worked out with others in the late 1970s and through most of the 1980s, was falsified – and fortunately so – by events. (I shall speak only for myself.) I held the view that (1) attempts at negotiated settlement would fail, and with that the country would slide into civil war of an inter-ethnic character; (2) [and this is connected with the first] that the ANC and SACP leadership would – through lack of a revolutionary program and strategy, through dependence on African governments and on the Soviet Union and Eastern European bureaucracies rather than on the working class, through repeated attempts to compromise in order to maintain capitalism, through the policy of substituting fireworks for armed insurrection – hobble the mass movement, lead the blacks to division, embolden the whites and cement them to militarism, and so worsen the slide into civil war.

5. I therefore adopted a standpoint roughly comparable to the standpoint taken up by Lenin in 1917 (a standpoint uncharacteristic of him, by the way, which he had previously rejected as “absurdly ultra-left”, but which was forced on him by the First World War)… I adopted a standpoint of intransigent revolutionary leftism intended to intersect with the unwinding of real events, of an unembarrassed assertion that only the dictatorship of the industrial working class could serve to lead South Africa out of chaos, and, by turning racial civil war onto the road of workers’ revolution, have some possibility of bulldozing through the filth and rubble of the old society, and opening the way towards a modern democratic and socialist development. However, this was by no means an attractive course and, had events actually descended into civil war – at certain times it seemed a fairly close run thing – the country would most likely have been brought to ruin, and none of us would be here today.

6. World events, coming at the end of the 1980s – with the complete collapse of the Soviet Union and Stalinist Eastern Europe in the face of rising global capitalism – were decisive in falsifying the first part of my old perspective. Those events altered the entire context within which negotiation could be pursued, within which Mandela and other prisoners could be released unconditionally, the ANC and SACP could be unbanned, and the mode of political containment of the working class and of the dispossessed by private property could be shifted from a reliance essentially on white power and the military-police apparatus to reliance on the popular leaders of the liberation movement itself.

7. The reason those world events were so decisive is not because the Soviet Union et al had promoted revolutionary change in South Africa – in fact they had done no such thing. It was because their collapse under the pressure of globalising capitalism cut off in the consciousness of every section of society the idea of an alternative to a capitalist development. And, in fact, I am very pleased that this happened.

8. There is a lot of mythology about the change in South Africa. A lot of mythology about the so-called “armed struggle” (with due respect to those present, and to the heroism involved, I would call it “three men and a dog”). A lot of mythology about the “revolution”. There was, by the end of the 1980s, an incipient revolution, based on industrialisation and the rise of the industrial working class, on urbanisation and the mass movement of the youth and workers against white minority rule, gathering under the flag of the UDF and COSATU. But essentially (with very fortuitous timing) political power was handed over on the basis of a concerted strategy by the international and South African bourgeoisie. Eventually only the tactical elements were in flux – although bad tactics, and wild, unpredictable events such as the murder of Chris Hani, could certainly have spoiled it. In the event, the brilliant leadership of Mandela, ably assisted by De Klerk (despite the latter’s dalliance with Inkatha and dabbling in civil war), but assisted most importantly by the underlying diversity, robustness and steadiness of South African society, pulled off the “miracle”.

9. Old Ted Grant had explained to us (those of the same tendency as myself) in 1976, when we wanted to proceed directly to a workers’ party based on the unions, that there wouldn’t be time, and that the working class would rather take the ANC leaders by the scruff of the neck and put them in power. In the event, it was the bourgeoisie which did that, to the acclaim of the working class.

10. While the first element of my old bleak perspective was thus directly falsified, I have seen no reason to revise the second element – the element pertaining to the capacities of the ANC and SACP leadership when it comes to leading and shaping the direction of social change. Had revolutionary leadership been called for, their failure (and even a failure of Mandela, great as he is) would have been evident at that stage. Instead their incapacity (the reasons for which I can only touch on today) became transmuted into a failure to address effectively the inequalities of the society inherited from the old regime and deepened in important ways by the development of global and South African capitalism since.

11. Now, here my judgement is in danger of becoming unduly harsh and unrealistic. In the first place great progress has been made in the development and modernisation of South Africa over the last 18 years. The advantages flowing from the peaceful transition to “majority rule”, in the context of advancing capitalist prosperity, have been colossal. Moreover, and this is central to my thesis today, the fact that the working-class leadership and its half-formed program of socialism was completely eclipsed by the nationalist petty-bourgeoisie has much more to do with objective realities than subjective weaknesses. The national state had become incapable of serving as the basis for the economic transformation of society. The program of nationalisation of the means of production, of state ownership and a comprehensive plan of production, had become globally obsolete. Not only was the core solution of Marxism shattered; globalisation had cut to the root of the old state-based social-democratic reformism as well. The workingclass leadership without exception simply dissolved all previous independence into the ANC, and sought to shield the working class and promote its interests by pushing the envelope of the class compromise which the ANC leadership had achieved.

12. This has proved largely fruitless so far. The benefits to the working class have come from bourgeois success in making unavoidable changes, not directly from the pressure of the workers’ organisations.

13. In the first period of the honeymoon, presided over royally by Mandela, all the classes were essentially taking stock of the “miracle”. (The golden glow that surrounds him is only partly due to his own impressive qualities.)

14. The Mbeki-Pahad administration – “Stalin-lite” as Zapiro depicts it – a regime of a Stalinist managerial type grafted on to an alien financedominated capitalism, set out to modernise the country and integrate it with the world on the basis of a hot-house growth of an African bourgeoisie. I have to laugh when these former doyens of the SACP invoke the two-stage theory against the left: “Comrades, we are simply doing what was always theorised!” Indeed so.

15. Their administration has been characterised by unwillingness to mobilise all the human and material resources of the society to tackle its problems, lest the ruling clique lose control; the outright denial of many problems and the insistence on dictating everything from the top down; the inevitable ineptitude, greed, corruption and arrogance to go with it. Priority given to rampant enrichment of a small elite; pressing social problems pushed well down the agenda. All this was bound to exhaust itself sooner or later in a political crisis.

16. Because the Africans have only one political flag and uniform, the crisis was bound to emerge as a crisis of the ANC. An alternative leadership (in many ways a more attractive one, although itself covered in grime) is catapulted forward. The striking thing is the lack of an alternative program to define it; it is defined by the name of one man. The key to the success of the ANC hitherto, its very definition of itself, and its usefulness to finance capital, is to be all things to all people. Mbeki-Pahad had ceased to be that. It is precisely Zuma’s ability to be all things to all people that suits him to be the new bearer of the myth of the ANC.

17. This myth is sustained (and we can be grateful for it for the time being), by the narrowness of the alternatives which global capitalism makes available to any regime. We used to say that there were two ANCs in one body, the bourgeois nationalist-Stalinist ANC and the proletarian ANC; the latter would in due course emerge. Well, we can just see it stirring, but it has yet to emerge. This is because COSATU and the ANC left have no real alternative program on fundamental issues, and quite possibly cannot have one at the present time.

18. Judging by your e-mails, some of you appear to be obsessed with the guillotine! If it were not for the global straitjacket, we could well have a French development. I am talking about 1791. But we are only in our present situation thanks to the triumph of capitalist globalisation and the collapse of illusions in a viable alternative national development.

19. The French Revolutionary honeymoon after the fall of the Bastille lasted less than two years. Ours has lasted nearly twenty years, and it is by no means over. The short time-frame in France was mainly because of the surrounding reactionary states to which domestic reaction looked for support. Thus the flight of Louis to Varennes was seen as a prelude to invasion. It acted as the whip of counter-revolution, driving the revolution forward. We have no whip of counter-revolution at the present time. Political reaction is very weak. At the same time no revolutionary solution is apparent. Capitalist relations are stronger than ever. There is significant underlying economic and social progress. Demagogy, while worrying, remains relatively feeble, its strength based essentially on the length of the delivery queues. But significant delivery is taking place; those in the queues are inclined to fight first among themselves. At the present time, despite its enormous problems, South Africa faces neither external danger nor internal hopelessness and despair.

20. If globalisation were seriously flung back, we could still get a French development – with Central African trimmings; internecine conflict with growing impoverishment on a very serious scale. But the probability is that the discipline of global value relations will continue. Those relations, the governing relations, are now more powerfully based even than during the 25-year post-war upswing associated with the global predominance of the USA.

21. In this situation the robustness of SA society has tremendous benefits, a robustness based on its makeup and complex divisions, held together primarily by the great vibrant progressive melting-pot of Gauteng. Before looking further at that, let’s turn first to the global context itself.

WORLD ECONOMY

22. Exchange relations have a powerful universalising tendency. Modern society, bourgeois society, civil society, capitalist society (whatever you prefer to call it) is characterised by the universal spread of exchange relations, of the constant extension and reconstitution of the division of labour in society. This is the hard core of its progressive content.

23. The crisis of the 1970s was a structural crisis of a globalising capitalism which had come to a point where it needed to break out of the suffocating confines of the national state. The defences of the working class were welded to the welfare and protectionist aspects of the national state. The defeat – at least the partial defeat – of the traditional working-class organisations was thus central to the capitalist break-out. That break-out occurred.

24. It had been prepared by the powerful globalising tendencies of exchange relations that had had a very long genesis. Remember that the period 1914- 1945 was an interruption of and setback to globalisation, involving a terrific assertion of the national state in militarist, imperialist and protectionist form. Into the mix was added the state based on nationalised property and a bureaucratic plan: the USSR, covering a fifth of the globe. To the extent that the twentieth century was characterised by the desperate assertion of the naked power of national states, whether for aggressive or defensive purposes, in ferocious rivalry with each other, we are well rid of it.

25. After the Second World War, capitalist globalisation – i.e. globalisation based on private property and exchange relations – resumed under American hegemony and the hegemony of the dollar. Globalisation was accelerated by competition with capitalism’s rival – the USSR and its satellites, where the state served as the nation’s monopoly in an essentially defensive arrangement against the encirclement of monopoly capitalism backed ultimately by the military, productive and spending power of the USA.

26. The global break-out of exchange relations from the confines of the national state in the course of the 1980s and 1990s coincided with the final crisis of state ownership in the USSR. At the same time China was slowly but systematically dissolving state ownership into society without sacrificing the disciplining and developmental capacities of the state. The most successful hot-house capitalist modernisation in history, internally driven, and unintentionally made possible by the defeat of Japan by America in the World War and the complete military victory of the peasant revolution under the red flag of Mao. Ironically this success – surely the greatest success of the national state ever in economic transformation – has depended vitally on the world market of a globalised capitalism breaking out of its nationalstate confines.

27. Marx and Engels wrote in the Communist Manifesto that cheap goods are the heavy artillery with which the bourgeoisie batters down all Chinese walls. The cheap and desirable goods of globalising capitalism provide the fundamental explanation for the collapse of the Soviet Union. Now the cheap and desirable goods of Chinese capitalism have added to the inevitability that every new “Chinese” wall will be ineffective; that every nation’s fate will be dissolved into the global maelstrom. In my view this is all to the good.

28. Angus Maddison (Contours of the World Economy 1–2030 AD ) has carefully analysed the statistical data that can be assembled regarding world economy and its various developments over the past 2000 years, and has projected the likely development of world capitalism forward to 2030. He expects the world economy to have a slightly higher average annual rate of GDP growth over the period 2003-2030 (3.23%) than in the period 1990- 2003 (3.21%). In his prognosis, the rate of growth in the “rich countries” will be 2.06%, and in the rest of the world double that (4.12%). (Page 337.) China’s growth rate is expected to average 4.98% compared with 8.56% in

the earlier period, and India’s 5.68% compared with 5.73%. China and India are thus pivotal to the Maddison perspective, but the maintenance of growth in the rich countries, albeit at a relatively low rate, is pivotal too.

29. China and India are both expected to have a per capita growth in GDP of 4.5% per annum; the rich countries 1.73% (a figure roughly the same as in the period from 1990-2003); Africa only 1%. (In 2003, the whole GDP of Africa was roughly equal to that of the UK and half that of Japan (Maddison, page 381).)

30. By 2030, in Maddison’s projection, China will have a per capita income level near that of Western Europe in 1990. China will become the world’s biggest economy by 2018 – a mere ten years away – followed by the USA and India. It is a severe challenge to the imagination to comprehend the implications of this change, of this ascendancy.

31. Maddison’s economic perspective assumes no major military conflicts other than those under way when his book was published in 2007. It also does not make allowance for a global depression. Should we? While recessions are possible (coming off an historically very high sustained rate of growth), I do not think depression is likely, at least in the short to medium-term. We are not yet by any means in an impasse of capitalism. On the contrary.

32. I want to read two recent extracts from the Financial Times which, to my mind, are probably correct assessments of the condition of capitalism in the short to medium term:

32.1 Writing on 31 July 2008, Samuel Brittan makes this assessment: [W]hat matters at a world level and for countries is that total nominal demand should be rising fast enough to support a sustainable rate of real growth but not so fast as to generate runaway inflation. …

The safe limit for nominal demand growth for the industrialised countries of the Organisation for Economic Co-operation and Development is probably not far from 5 per cent per annum. You would not think from the prevailing hysteria that this is almost exactly the rate at which nominal GDP has been growing in 2007-08 in this area, according to the National Institute of Economic and Social Research’s Economic Review. So much of 2008 has passed that this figure is more an estimate than a forecast. But for what it is worth, roughly the same rate of expansion is predicted for 2009.

For more successful developing countries, safe limits are a good deal higher. Even so, the 17 per cent nominal GDP rise expected this year in China is stretching things – and, not surprisingly, that is associated with an expected rise in inflation to 7 per cent.

The world economy as a whole has clearly hit the buffers. Demand growth has been too high for world supply potential. This is the common factor behind the rise in oil, food and commodity prices, which has struck the OECD countries as a rise in imported inflation. At present, overheating in some of the Bric (Brazil, Russia, India, China) countries coincides with economic slack in Europe and North America. This is no more paradoxical than the situation that confronts a national central bank when some regions are depressed and others over-buoyant. The analytical problem is that no one really knows what the permanent element is in the rise in oil, food or commodity prices. Even if there is a long-term upward trend in these primary prices, there is likely to be at some stage at least a temporary fallback. Some optimists claim that this is already happening on the basis of recent weakening in oil and commodity prices. The YouGov survey shows a small drop in both short-term and long-term UK inflationary expectations this July, which may or may not be a straw in the wind.

If and when the fallback has gone on long enough, there will be some reduction in recorded actual inflation. Central banks may wait too long to be absolutely sure, but the world will not come to an end.

Faithful readers of the NIESR Review will have noticed that both its estimated real output growth for 2008 and its forecast for 2009 show the UK, and to a lesser extent the US, not technically in recession but growing a good deal more slowly than other OECD countries. Some people may find the explanation by delving into bank balance sheets. But there is something more fundamental. That is the long-awaited rebalancing of the major English-speaking economies towards less reliance on consumer demand growth and more on net exports. There was, in my view, nothing immoral in borrowing excess developing-world savings to finance a consumer spending spree. It was fun while it lasted – and may even have saved us from a genuine international depression – but it could not be expected to go on for ever. The required rebalancing has been swollen by the need to accommodate the permanent element in the increase in oil and commodity prices.

32.2 A month earlier (27 June 2008), dealing with the UK, Martin Wolf wrote:

… the huge labour supply shock implied by the entry of the giant Asian countries into the world economy initially drove down the relative prices of imports of labour-intensive goods. This was beneficial to the UK. Now the same shock is raising the price of resources.

We do not know whether these higher prices are a one-off shift, a shift that has already overshot or the start of a continuous rise in the relative prices of resources, especially energy. But it is highly likely that the days when the UK could import disinflation have gone…

Above all, the UK must keep a sense of proportion. In its latest Economic Outlook, the Organisation for Economic Co-operation and Development forecast economic growth [for the UK] at 1.8 per cent this year and 1.4 per cent in 2009. It also forecasts a shrinkage of the current account deficit to just 3.1 per cent of gross domestic product and a decline in CPI inflation to 2.5 per cent next year. By the standards of the macroeconomic crises of the mid-1970s, early 1980s or early 1990s this is nothing to be seriously agitated about.

33. The German economy contracted by 1% in the second quarter of this year, after an unexpectedly good first quarter. The revised forecasts for the whole year are of positive growth of a little less than 2%. The Japanese economy seems to be roughly flat at the moment. But let’s remember that this is on a very high plateau of wealth production.

34. The present crisis is not the classic crisis of capitalism, of supply chronically exceeding effective demand, but rather involves demand exceeding supply. At the same time a big part of the support for that demand – credit extension – has hit a crisis (“the buffers”, as Samuel Brittan put it). The problem for the managers of capitalism is to increase supply, ease demand, and cure the crisis in credit extension all at the same time. The market itself provides the fundamental rebalancing mechanism now at work.

35. The problem is particularly acute in the United States, where the consumer has been living beyond her and his means, on credit supplied at exceptionally low interest rates out of the surpluses injected into the US by other countries, especially China, and secured by artificially inflated house prices which are now in severe decline. But even the sub-prime crisis, which set off the necessary correction, has failed so far to precipitate a global recession. Globally, in its potential for further development, capitalism is still robust.

36. Kenneth Rogoff (Financial Times 29 July 2008) points to the absurdity of calling for priming of the pump at a time when demand for commodities is exceeding supply and raising prices. Thus he opposes measures to bail out the financial markets, which may further stimulate inflation. But his is an extreme view. The problem for the policy makers is to allow the market to ease away the imbalances without unleashing inflation or tipping things over into a sharp recession. But the imbalances cannot even be eased away without pain for consumers, especially in the USA.

37. The political crisis there is now very acute. The mood is depressed, angry and fearful. People do not come down off high living standards easily. It is impossible for Americans to be satisfied now with anything the politicians can deliver. There is widespread cynicism towards all politicians (a global phenomenon, by the way). Obama’s agenda of so-called “change”, which, on inspection, is wholly lacking in fundamental content, will probably suffice (I would think) to carry him to the White House in November’s election. McCain, in order to distinguish himself from Obama and satisfy his backers, is obliged to advocate an economic conservatism, including tax cuts, which manifestly offers no solution to ordinary working-class and lower-middle class Americans. McCain increasingly appears as Bush III – except that he promises to stay in Iraq for 100 years if necessary!

38. Although the American state is in crisis, at home and abroad, its economic reserves remain very considerable. The recent Bush stimulus package, in response to the sub-prime crisis, involves Federal payments to 130 million households amounting to about $100 bn (equal to roughly 60% of South Africa’s GDP).1 Consequently in the second quarter of 2008, even as house prices continued to fall, there was a 1.5% increase in personal consumption expenditure in the US. The US budget deficit is predicted to be over $480 billion in fiscal 2009 (a record), increased by the effect of the sagging economy on revenue. In the event of deep recession – the least likely scenario among those sketched by Standard & Poor – the budget deficit would increase to $710 bn in 2010. But even that need not be tickets for the dollar.

39. The dollar’s share of reported reserves held by members of the IMF is still about 60%, albeit having declined by 10% over the past seven years. (Etienne Swanepoel, Business Report, 6 August 2008.) It is not easy to offload these investments without destroying their value at the same time. US Treasury bills are still the preferred securities for countries with financial surpluses to invest. Although its share has been falling, the dollar was involved on one side of about 86% of all foreign exchange transactions in the world as recently as April 2007. (Bank for International Settlements, 2008 Annual Report, 30 June 2008, page 87.)

40. US inflation is expected to fall back to 2.3% in 2009. It is currently running at about 4%. There are features of stagflation in the US economy, but I do not think it would be correct to characterise the global situation as one of stagflation. And the buoyancy of the global economy will help sustain the US.

41. To repeat the essential point, the world is going unevenly through a crisis of readjustment and rebalancing in the course of a colossal upswing in the development of world productive forces and the world market. I think we will get to a new impasse of capitalism, a crisis of effective demand based on the inequality generated and maintained by private property, but we are not nearly there yet.

42. In my view the Chinese will be compelled to raise domestic consumption, raise wages and standards, as will India. There would thus be a tremendous evening out of global imbalances, in a context of global economic growth. The change results not from any “trickle down” of capitalist wealth – in fact private property and exchange automatically increase inequality while generally stimulating the creation of wealth – another discussion. However, there is no inevitable tendency of capitalism or the market towards mass immiseration. The progressive change now under way results precisely from the entry of new billions of humanity into global exchange relations. The main constraints coming into focus are the problem of terrestrial resources and environmental strain. Here new revolutions in technology will be vital, and will probably themselves stimulate economic development.

43. Only at poised moments do political phenomena become primary causes, and then of course they can be profoundly influential, changing the course of history. Otherwise, in the medium to longer term, political phenomena are secondary to and reflective of deeper causes – primarily the technical development of the productive forces, of the division of labour, and of the changes in property relations which this development brings.

44. This is the context, in my view, in which to evaluate South African developments in the short and medium term.

SOUTH AFRICAN ECONOMY

45. In its recently revised forecast, Merrill Lynch concludes that there will not be a consumer recession in South Africa in the next period, but that real household consumption expenditure will continue to grow slightly, at around 1%. This is quite remarkable when the level of interest rates and the level of inflation are considered, and coming on top of a growth in real consumption expenditure of 9% in 2006/2007. There have now been 37 consecutive quarters of positive economic growth.

46. Even the Cees Bruggemans so-called forecast of recession – when you look at it – only refers to his employer, FNB, being on “recession watch”. I suspect FNB has been using Bruggemans to warn Tito Mboweni against carrying on with interest rate hikes, which threaten further impairments to all the banks’ lending books.

47. Mboweni is forced to keep interest rates high, not because that is effective against food and oil inflation – it cannot be – but because he cannot let the rand go to the devil and must try to retain its attractiveness to foreign capital. The central bank does not have the means to sustain the exchange value of the currency against a run, but it does have the ability to precipitate a run and ruin it. To the extent that our productivity falls behind and our inflation runs ahead of other markets competing for capital, the value of the currency must tend to decline and must be compensated for by higher nominal returns on rand-denominated holdings. Trevor Manuel, despite his shades of difference with Mboweni, understands this clearly; the flat earth economists of the fuzzy left do not.

48. The latter are utopians. They do not take value relations, or exchange relations, seriously.2 They hopelessly over-estimate the continuing potentialities of the national state to master exchange relations, and determine property relations, in isolation. They do not see that, thanks to globalisation, the national state has become or is everywhere becoming a kind of super-municipality. It is fundamentally an administrative unit, no longer fundamentally an economic unit. Even the USA and China cannot now effectively command domestic value-relations. The genie has escaped from the bottle. The macro-economic policy of the South African fuzzy left, if actually implemented would necessitate autarky and produce a Zimbabwean fiasco. I believe COSATU would draw back from the implementation of such a policy, and that Zuma and his advisors have the sense not to go there.

49. Returning to the question of recession: Bruggemans himself notes that fixed investment spending will continue to grow at around 7.5%, and that infrastructure construction is dependent on government spending which he calls “recession proof”. In fact there is a colossal construction boom which is forecast to last well beyond 2010, perhaps beyond 2015. Since the year 2000, the construction industry has achieved a compound growth rate of 10 per cent a year, compared with 4% a year for the economy as a whole (Business Report, 6 August 2008). Public sector spending on construction, machinery and equipment, including public corporations such as Eskom and Transnet, is budgeted at R568 billion over the next three years. This would have been impossible without the world economic upswing and without Trevor Manuel’s generally sound macro-economic framework (as well as the effective management of SARS). It is bound to have huge spill-over and multiplier effects in the private sector.

50. Trevor Manuel’s national macro-economic policy is not the real constraint on our development. Remarkably, there are currently more available resources than we know how to spend, or know how to spend without corruption, incompetence and waste. The main domestic constraint on our development is lack of education in general and of skills in particular – a criminal dereliction by the apartheid and post-apartheid governments alike. In South Africa the “moegoe factor” is very big. (Thank God we didn’t get the Olympics.)

51. Despite higher interest rates, credit extension has continued to grow at nearly 20%, probably explained less by consumer borrowing than by corporate borrowing for construction and other investment spending. The working class and lower middle class are obviously experiencing severe pain through extremely high food and fuel price inflation and higher mortgage, car and furniture repayments. There appears to have been some inventory accumulation. Factory output could well have fallen, although Statistics SA reports that manufacturing as a whole, buoyed by petroleum production and food production at inflated prices, rose an annual 6.1% in June (Business Report, 8 August 2008). Job losses are significantly up in manufacturing, but net job creation may still be inching forward. We have a sharp slowdown in the overall rate of economic growth, but not a recession. All things considered, if there is a recession before 2010 it is likely to be a shallow one.

52. As an illustration of this outlook, let me quote Johan van Zyl, CEO of Toyota South Africa, writing in Business Times of 6 July 2008:

Despite the decline in market performance at present, the market is still in a far stronger position than it was in 2003 at the end of a four-year period when little change in demand for new vehicles was experienced, as the market tested the 400 000 vehicle-a-year threshold.

Current forecasts favour a period of consolidation through to 2009 with a resumption of growth from 2010 through to 2012, when the market should recover to the highs of 2006 and 2007 and potentially test the 800 000 vehicle-a-year threshold through to 2015.

53. The tightened circumstances and fear of job losses at present are conducive to anger and desperation in the working class, and among the poor generally, but not to sustained militancy. Sporadic outbursts of resistance, even rebellion, are to be expected. However, while the pattern will be uneven, I would expect that workers will generally be keeping their heads down, and that wages will fall behind inflation, preparing the way for greater militancy once the economy turns up again. Someone who has recent experience working in the CCMA tells me that while retrenchments are up, wage settlement are running at around 11% and are being achieved without strike action throughout the country. Most bosses are prepared to pay more to a reduced workforce, while growth continues. My informant says the settlements are generally above inflation, but I suspect that effective inflation for the lower paid is running at more than that. I think, in any event, that the working-class mood is bound to be one of caution at the present time, given the extent of job insecurity.

54. Nevertheless, the extent of support in Gauteng for last Wednesday’s day of action by COSATU was significant (although it was very feeble in the Western Cape). A general strike against inflation is about as useful as a general strike against bad weather. If constantly repeated, it would only convince the organised workers that they have no strength. I would guess that public sector workers would have made up at least half of those taking part. All the same, this was basically a demonstration of working-class discontent with the ANC and with fat-cat capitalism, and a step in thrusting COSATU into a more central political role.

55. COSATU deflects this pressure towards Zuma. The absurdly fanatical support of the COSATU leadership for Zuma is essentially – if I may be permitted a technical expression – an arse-covering exercise. If they had an alternative program, they would be emerging far more independently (although I would remain firmly opposed to a split from the ANC for a long time to come). Zuma is required as a screen, and a means of postponing answers to tough questions for a further period, quite possibly of five or more years.

56. As Ebrahim Harvey observes (Cape Times 6 August 2008), post election the Zuma government [I would add, likewise a Motlanthe government, if it comes to that] will face heightened expectations of improved delivery and measures against poverty. We may get both of these. However, Harvey exaggerates the possibility of mass pressure “overwhelming” the new government. The role of the left leaders is precisely to contain mass pressure by giving it partial release, and by using up their authority in the service of the ruling power. Under many veils, property is the ruling power.

57. While the lamentable, barbarous political discourse at the present time must be strongly opposed, I do confess to a very low level of alarm in general at the political developments around and since Polokwane. There is an inevitable “second transition” taking place, towards a more chaotic, more normal politics in South Africa. I am pleasantly surprised that it has come so quickly, a result of the degree to which urban society predominates here in contrast with Zimbabwe. It is bound to be something of a roller-coaster ride.

58. The politics of the freezer, over the past 15 years and especially under the Mbeki-Pahad administration, was in a sense necessary but never healthy. Practically the only living thing in the freezer was the TAC, the true exemplar of civil society initiative and mobilisation since the UDF. Even COSATU, except on the issue of Zimbabwe, was virtually defunct until the civil service pay strike last year. Now the leadership jumps from the narrowest economism to petty-bourgeois populist demagogy. But at least we have an awakening to normal politics in this extremely diverse, unequal, ethnically divided and class-divided society. And in this awakening COSATU is central. It is re-emerging as the organising centre for opposition to inequality. Systematic orientation by political activists towards COSATU and its work-place organisations, as well as to the schools and universities directly, is vital.

59. We have a priceless constitutional framework, a framework of official aspirations, to work with – more modern and progressive than anything any section of South Africa society could ever advance on its own. It may be seriously eroded, but it will not easily be overturned. It is the product of the creative tension of our extraordinary mix, the product of contestation – and I would place faith in contradiction and contestation rather than in particular outcomes. Everything is today under scrutiny; everything is sought to be laid bare; everything contested by the multiplicity of wholly or partially contending interests.

60. The great step forward marked by Polokwane – the most valuable social dividend coming from the defeat of white minority rule – is that for the first time the enemy of the downtrodden is not defined as “the whites”. In fact whites were irrelevant at Polokwane. That is a maturing and modernisation of the politics of the country. However, in the demagogic game, the easy identification of ethnicity with accumulated property and vested privilege is bound to reassert itself. It is very good that Boesak has sounded the alarm, and effectively joined his warnings to a revival of UDF traditions. It is important to build on that.

61. Charles van Onselen calls nationalism “Dracula”, and I agree. Nationalism has today no progressive role to play whatsoever. All forms of nationalism are now either incipient or actually realised forms of organised crime. Actually, I think the next government is likely to be somewhat healthier in regard to nationalism than the present one, despite the powerful continuing tendencies towards corruption and patronage associated with the state, and despite the impulses towards a Zulu ascendancy that are not far below the surface in the Zuma campaign.

62. Politically, we are now moving beyond the TAC phase, if I may put it like that. Civil society activism has to broaden out, as it is beginning to do. It is important to support the development of a broad-based program to mobilise all the country’s human and material resources, not only by the state (within its limitations), but by the whole of civil society for a war on poverty, for “social justice”, for equal education and health, for housing the homeless, for a massive program of public works – even for youth conscription, or at least a voluntary “call up” of the unemployed youth to labour and training in that regard.

63. It would be a big mistake, playing into the hands of the opportunist demagogues like Nzimande, and closing off the road to the organised workers and the youth, to pitch one’s criticisms of Zuma and his camp as if they are the enemy. The angle of criticism should be from a progressive programmatic position to the left of Zuma, which defines his tasks and those of the ANC and COSATU positively from a pro-worker and pro-poor position, and points to short-comings from that point of view.

64. If we are to defend institutions such as the courts – necessary buffers against unrestrained executive, legislative or mob power, and necessary protectors of objectively established individual rights – we must be astute to avoid doing so from a class-conservative position, which is essentially concerned under various disguises to maintain the privileges of property. In the final analysis, that is after all what the state is for and what judges most naturally do.

65. We want a lean and efficient state administration at all levels, whose spending is not on itself but on development and welfare. I am all in favour of the developmental state (just as I am in favour of the developmental municipality), but one cannot be the friend of a bloated bureaucracy, of sheltered employment for lazy and inefficient public servants, or of the state as a pig-trough of patronage for the nationalist elite.

66. Above all it is necessary to combat illusions in the national state as holding the solution to the basic problem of inequality and poverty; it is necessary to combat the utopian notions of the unreconstructed “left” theorists, who would like nothing better than to turn South Africa away from globalisation and into autarky. There is no bottom to the calamities that would follow from that. We need perhaps another twenty years of systematic integration of SA with the world in order to put that prospect completely behind us, and ensure that the modernisation of this country cannot be derailed.

67. Effective intervention calls for a unity of theory, explanation and campaigning work. Urgent now is to organise opinion around a more or less coherent body of basic ideas, open to correction and development; to propagate those ideas in close relation to the specific situations and challenges that must be confronted; and to render them concrete in the form of definite proposals and demands for change. There are tremendous resources, human and material, that can be mobilised within a once-vibrant civil society now re-awakening to its tasks.

68. The vital thing which I want to emphasise is this: A rational program for transforming society, for overcoming poverty and inequality, for promoting civilisation against barbarism, must situate itself within the new global context, and advance clarity, an overwhelming consensus, and concerted activism on that plane.

A WORLD TO WIN

69. “We have a world to win,” wrote Marx and Engels, and I consider that to be more true now than ever before. In fact what globalisation has done is to pose in a way never posed before the necessity of world government. What is dismissed as hopeless utopian wishful thinking is becoming imperative in fact. Human thought is conservative and, as Marx put it, tradition weighs like an Alp on the human brain. But changed conditions eventually precipitate revolutionary changes in thought and mass consciousness. The activists must lead the way.

70. The break-out of private property from the confines of the national state has not reduced, but on the contrary intensified, the need for society to intervene in the market. And society needs state power, law, regulation, to do so. Joan Robinson explained long ago, in Economic Philosophy, what the free market can do and what it simply cannot do. Over the past three decades or so, competition between national states, between competing currencies, between competing laws and regulations, coupled with the increasingly free flow of capital, has produced a race to the bottom, where the lowest attainable human standards win the game. Capital is located in exchange relations beyond the national state. States compete for capital via low-wage competition, tax-rate competition, deteriorating health and safety standards – you name it. Human upliftment during these decades has been despite this race to the bottom, and at the cost of monstrous inequality, insecurity and suffering. But none of that is ultimately necessary. Just as legislation for the ten-hour day once stimulated British capitalism despite the opposition of the bourgeoisie, the fact is that when the capitalists are subjected to the same rules and standards, they find the means to meet them and flourish. Redistribution stimulates demand. There is huge, unprecedented scope for redistributive measures globally today, provided that capital – obliged by nature to attain a competitive (i.e. normal) rate of profit or disappear – cannot hold reforms to ransom as it does now. For that, deliberate human action, political action is needed on the global plane.

71. For fundamental changes to take place, more than ad hoc agreements between national states is required. International government and law is required. Look at the feebleness even of the G8. Referring to their meeting in Japan on 7-9 July 2008, The Economist (7 July 2008) said the G8 leaders “have many challenges but few tools”. In my view this is because there is no global state.

72. It is remarkable – an important straw in the wind – that many of the world’s biggest banks are now calling for reforms to curtail their own businesses by bringing securitisation and derivatives under regulatory control internationally. (Financial Times 6 August 2008). The US Federal Reserve Bank itself is calling for international regulation of financial markets, obviously intending to make itself a central element in that process. But these are only partial indicators of a far more comprehensive necessity.

73. Global-democratic tasks now subsume the national-democratic tasks of old, and inherent in those tasks is the elimination of poverty and social inequality. It is not as if the world lacks the technical means to achieve this. On the contrary, the surpluses generated are massive; much more massive are the potential surpluses on the basis of the technological revolution that has taken place in our lifetime. These surpluses are little used for social upliftment, but are manipulated instead by the masters of finance capital in the blind pursuit of private greed and power removed from virtually all social control.

74. Money-power commands the bureaucracies of the world. The democracy of globalised capitalism is a democracy of money, not of people: of One Dollar One Vote, not of One Person One Vote. Money most directly defines the real scope of the individual’s personal power and freedom. In fact valuerelations, extending beyond every established political framework, have allowed private property to expropriate the political rights of everyone. The democracy of people is confined increasingly to the secondary and the local.

75. The only vote you have is for the owerheid of a glorified municipality. Democratic aspirations are thus bottled up in an inadequate vessel. At the top, this elevates bureaucracies beyond effective control and intensifies the gangster character inherent in all political leadership. Below, there is everywhere an increasing distrust of ineffectual politicians; an increasing irresponsibility of politicians; an alienation of the people from government; an increased adherence to local personalities and leaders without the power to change what needs to be changed.

76. The answer to this is not to turn inwards, but rather outwards, onto the plane where effective solutions really lie. In the course of doing so, it will be possible to develop a program that goes ultimately beyond partial reforms, involving a newly theorised conception of the potential transition of society internationally from the rule of property to socialism (equality) itself. But that is somewhat beyond the scope of what I was asked to talk about today.