Inequality is no longer just about race - African Communist

Editorial notes that narrow black elite enrichment is increasing poverty for majority and exacerbating the problem

African Communist 1st Quarter 2017 Issue 194

Radical economic transformation in the interests of all, but primarily the poor

Over the past few months an increasingly shrill, factional and narrow black economic empowerment (BEE) voice has been heard. The ANC’s correct 2012 Mangaung National Conference call for a second radical phase of the National Democratic  Revolution

(NDR) is being dumbed down in these quarters to a narrow question of radically increasing private black (or rather African – another relatively new back-sliding development) capitalist ownership of the economy.

Since at least the late 1920s the Communist Party in South Africa has recognised that the economic, social, political and cultural empowerment (or rather the collective self-empowerment) of and by the African majority lies at the heart of the struggle for national liberation and socialism in South Africa. The current imperative of a second radical phase of the NDR is precisely grounded in the fact that this collective national emancipation remains largely unfulfilled, notwithstanding some important advances since 1994.

In our post-apartheid South Africa, inequality, poverty and unemployment are still massively marked by race (but also by gender, class and geographical location). Indeed, while it is important to remember that income (and even more asset) inequality between black and white remains extraordinarily and disgracefully high, class formation within the African community post-1994 has resulted in intra-African inequality becoming the main contributor to our extraordinarily high Gini coefficient income inequality measure.

A number of independent academic studies and, indeed, the ANC-led government’s own assessments, have noted this reality. According to one representative academic study: “From a policy point of view it is important to flag the fact that intra-African inequality and poverty trends increasingly dominate aggregate inequality and poverty in South Africa.

Race-based redistribution may become less effective over time relative to addressing increasing inequality within each racial group and especially within the African group”. (Trends in South African Income Distribution and Poverty since the Fall of Apartheid, 2010). An HSRC study found that growing intra-African inequality contributed some 33% to overall inequality in South Africa, while intra-white inequality contributed 21%.

Expressed in less academic language what this is saying is that the assumption that enriching a select BEE few via share-deals, or measuring empowerment progress in terms of direct individual black percentage ownership of the JSE, or (worse still) looting public property in the hands of state owned corporations in the name of broad-based black empowerment is resulting in the very opposite – increasing poverty for the majority, increasing racial inequality, and persisting mass unemployment.

One reason for the failure to drive a thoroughgoing, radical transformation of our political economy after 1994 is, precisely, attributable to the impact of the narrow BEE currents that are now, once more, surfacing voraciously.

A number of things need to be remembered about the evolution of BEE in South Africa. In many respects, narrow BEE was not the invention of the national liberation movement, but of white capitalist circles in the early 1990s. Realising that an impending non-racial democracy would deprive monopoly capital of its reach into the state, established capital sought strategically to pre-emptively co-opt into their shareholding ranks a stratum of blacks and particularly those with likely ANC-linked political connections.

Pre-emptive moves by established capital to transfer some white share ownership to Africans started in the early 1990s, years before the ANC ever began speaking of BEE. In 1990 the National Sorghum Breweries was sold. In 1993, the Afrikaner-dominated conglomerate, Sanlam sold 16% of Metropolitan Life to a black empowerment consortium, New African Investments Limited (Nail).

Indeed, references to “empowerment” (not yet even “black” empowerment) were only first included in ANC policy documents in the run-up to its December 1997 Mafikeng conference. In the 1997 economic policy document the ANC stated:

“National Empowerment Policy: The ANC should clearly articulate a National Empowerment Policy that will focus on those who have been historically disadvantaged and particularly black people, women, youth and the disabled and rural communities. The empowerment process must constitute part of a more radical and profound change in social relations.

Changing ownership and workplace relations are part of this wider process of empowerment. Within the National Empowerment Framework government should establish a National Empowerment Fund which must lead to the stimulation of saving, shift people from the informal to the formal sector, and from predominantly retail to more manufacturing SMMEs.”

Like the SACP’s 2014 Going to the Root discussion document, this 1997 ANC policy statement correctly locates the question of “empowerment” within the overall imperative of a “more radical and profound change in social relations”, including workplace relations. In 1997 a National Empowerment Fund was seen as a means of stimulating saving, and not as an instrument for leveraging indebted BEE share-holding.

Likewise, the ANC document seeks to shift SMMEs towards productive (and job creating) manufacturing activity away from an excessive focus on retail. All of these are fundamentally correct strategic perspectives which have since been consolidated in further policy development – with the emphasis on broad based BEE, for instance, or with the current objective of fostering productive, hands-on, black industrialists.

Unfortunately, in practice, many of these good intentions on paper have been eroded by a hungry black parasitic stratum and, also, by established capital which prefers the lesser evil of co-option of politically connected personalities rather than any thorough-going transformation of our political economy. The evocation of white monopoly capital by the likes of Mzwanele (aka Jimmy) Manyi, or Andile Mngxitama, or the Gupta media ironically plays directly into this co-optation agenda. As the Freedom Charter recognised more than 60 years ago, the problem with monopoly capital is not just that it is white but that ultimately it is monopoly capital.

The extraordinary levels of oligopolistic domination of South Africa’s economy date back to the late 19th century. The mining-energy-finance monopoly complex lay at the heart of the development of South Africa’s colonialism of a special type, and its persisting dominance of our economy has resulted in the chronic challenges of unemployment, poverty and inequality, rural underdevelopment, and the suffocation of small and medium business.

Darkening the pigmentation of monopoly capital is not the issue. But apart from the failure to contribute to the structural transformation of our political economy by the narrow individual BEE ownership project now being advanced aggressively from certain quarters, there are other deeply negative consequences of this trend.

We have already noted the drift into a narrower Africanism from these quarters. This is partly an internal ANC right-wing reaction to Gupterisation (“why should non-Africans be the principal beneficiaries of political favouritism and state capture?”). But even where the more conventional formula is invoked – “blacks in general, Africans in particular” – what is really at play is “blacks in general, Africans in particular, and me and mine specifically”.

This emergent comprador and parasitic capitalist stratum has a very limited sense of solidarity. Much of the inner turmoil within the ANC has its roots in this reality. Factionalism and electoral slates tend to have little to do with principled programmatic differences, and everything to do with individual enrichment.

For many decades the SACP has recognised the centrality of the allround self-emancipation of the black majority in the struggle for social justice and, indeed, socialism. For as long as South Africa remains a capitalist-dominated society, there is no earthly reason why capitalists in our country should be overwhelmingly white (and male). As much as the deracialisation of the economy and creation of an African capitalist class is important, for the SACP the struggle is mainly about rolling back and progressively abolishing the oppressive chokehold of monopoly capital over our society.

This requires many initiatives not least an increasing emphasis on social (not private) ownership, and on the values of solidarity. This must include the consolidation of a progressive, democratic, developmental state (and not the factional looting of our state owned enterprises and development finance institutions); and the fostering of collective, social entrepreneurship (and not dog-eats-dog individualism) in the context of a solidarity economy. (Pat Horn’s interesting account of the solidarity economy in Nicaragua in this issue is extremely relevant in this regard).

The aim is that the next issue of AC, to be released at the end of April, will focus mainly on what is meant by the second, more radical phase of the transition and radical economic transformation. Readers are encouraged to write articles for the proposed issue on these topics.

There are encouraging signs that across the ANC and our broader Alliance, there is a growing determination not to be bullied by those who conceal their personal self-enrichment agendas behind lofty appeals to “black economic empowerment”. We must continue to expose these fraudulent agendas. But we must also give substantive content in theory and practice to real alternatives. Let us advance a genuine second radical phase of the national democratic revolution.

Source: SACP, 16 February 2017