The Guptas and the markets

Jeremy Cronin says corporate capture typically more insidious than the brazen type pursued by that family

Neither the Oppenheimers, Ruperts, Koos Bekkers nor the Gutptas: Confront corporate state capture in all its manifestation, deal decisively with its immediate threats  

On the day after the landmark Constitutional Court Nkandla judgement one remark in particular caught my eye. According to Collen Garrow, an economist at Lefika Securities: “what might be learnt from yesterday’s experience was that markets would make decisions for policy-makers, punish them where they got it wrong, but also reward them when they got it right, as was the case yesterday.” (Business Report, April 1).

Garrow was, of course, referring to the momentary surge in the rand’s exchange value following the Concourt judgement. But there, in a nutshell, the problematic relationship between capitalism and a constitutional democracy stands exposed. For its sheer hubris this boast that markets will (and should) make decisions for elected policy-makers, or perhaps guide Constitutional Court judges, exposes the corporate capture endeavours by the Guptas as a small, if a particularly parasitic part, of a far more extensive, and pervasive reality.

Why worry about the Guptas, some might be inclined to argue, when the “markets” have got things sewn up already? For let’s be clear, the markets are not an idyllic interplay of millions of global citizens influencing outcomes through democratically exercising their sovereign individual market choices. The one-person one-vote democratic principle doesn’t apply in the market place. Market sentiment is dominated by the profit maximising interests of exceedingly powerful corporate monopolies and their adjuncts, among them the ratings agencies.

I am not arguing that a democratically elected government can simply run its head up against the brick wall of these harsh, unjust realities. But how do we defend and consolidate our national sovereignty and democratic mandate to build a more just and egalitarian society against the rapacious agenda of the global one-percenters?

How, in the face of exceedingly powerful monopolies, does the public sector boldly advance not private, but public interest, defined by our Constitution (the very one now selectively upheld by all and sundry) as including “the nation’s commitment to land reform, and to reforms to bring about equitable access to all South Africa’s natural resources”?  Garrow’s markets are not going to reward us in that endeavour. 

Over the past weeks the Nkandla matter and corporate capture have become intertwined. Unfortunately, much of the recent public discussion on the dangers of corporate capture has been superficial, and often simply factional.

First, it’s important to remember corporate capture is typically more insidious than the recklessly brazen attempts of the Gupta family, and it is certainly not a reality confined to South Africa. The United States political system is possibly the most corporately captured in the world.

Around half of all retiring US Congress members return to the institution as lobbyists for major corporations. US academic Robert W McChesney notes “the corruption in Congress and across the government today is only rarely of the traditional bribery kind. It is instead a far more structural dependence upon corporate money built into the DNA of the political system – traditional pay-offs are not necessary.”

Writing of the US financial sector in the immediate aftermath of the massive bail-out at public expense, former IMF economist Simon Johnson referred to a “quiet coup”, noting the “easy access of leading financiers to the highest US government officials and the interweaving of the two career tracks.” 

Johnson referred specifically to the revolving door between public office and Goldman Sachs, notorious for its role in precipitating the ongoing Greek economic crisis and the broader global capitalist crisis that costs tens of millions of ordinary people jobs and savings.  US Senator Richard Durbin recently said of the banks’ influence on the Senate, “frankly they own the place”.

In our own post-apartheid situation, elements of corporate capture are certainly not a recent phenomenon.  The adoption of the 1996 GEAR policy programme, riding rough-shod over the 1994 RDP electoral mandate which had overwhelming support, was an early sign that individuals in key parts of our state (many deployed after stints at Goldman Sachs) had been corporately captured – if not through their pockets then certainly in their minds.

But there have also been a succession of more venal attempts at state capture through the perversion of “black economic empowerment” (BEE). Brett Kebble’s criminal circle was able to pervert senior government officials, partly through personalities within the ANC and ANC Youth League.

The SACP exposed former ANC YL’s Julius Malema’s campaign for the “nationalisation of the mines” for what it really was – corporate capture of a new kind. Malema’s “nationalisation” campaign was funded by BEE mining interests at a time when their highly-leveraged mining shares were under water. The “nationalisation” call was little more than an attempt to bail-out these interests at public expense.

More recently, the SACP has blown the whistle on Koos Bekker’s Naspers/Multichoice/Media 24 empire and the manner in which it has infiltrated key state departments; delayed, indeed captured, the much needed digital migration process; and undermined the public mandate of the SABC.

But looming over these more brazen examples is the more insidious forms of corporate capture, the manner in which established monopoly capital, through its domination of markets, including the media market, has shaped public discourse on what is good and what is bad. This is corporate capture of the mind, the shaping of what is thinkable, and what is unthinkable, with its endless emphasis on pleasing investors, on letting markets rule, on shrinking tax rates for the rich, on making the labour market more flexible, etc.

Concern about the role of the Gupta family should, therefore, be neither a new concern nor a siding with one wing of private corporate interests against another. But this also emphatically does not mean we should now fall in line with the recent pro-Gupta counter-offensive which consists essentially in saying the Guptas are “only small players”. “If you think the Guptas are bad”, Andile Mngxitama and Pinky Khoabane, among others, have argued, “what about the Ruperts and the rest of white monopoly capital?”

Here is where it becomes necessary to unpack the different operational modes of different factions of capital. Johann Rupert’s extensive business empire was inherited largely from his father Anton, a Broederbonder.

The Rupert empire is centred on two major corporations that emerged from the South African tobacco giant, Rembrandt – Remgro and Richemont. The former is an investment company headquartered in Stellenbosch with interests in finance, mining and industry, while Richemont is a Swiss-based luxury goods company. The Rupert business empire embraces hundreds of companies in 35 countries.

It is an empire that does not depend on SA government tenders.  Rupert can leave much of the schmoozing of ministers to others. Back in the early GEAR days Rupert senior had already wrung the key concessions he needed from the post-1994 government – in particular massive liberalisation, not least of exchange controls. Rupert junior can now fly on auto-pilot, handing over much of the coercion of government to Garrow’s punitive markets.

However, unlike Rupert who operates in a disdainful manner towards the ANC-led government, Bekker’s Naspers/Multichoice/Media 24 empire, despite similar roots in Afrikaner capital accumulation, has other requirements.  It operates within highly regulated sectors and there have been constant interventions from Naspers/Multichoice/Media 24 to suborn ANC MPs and government officials.

By contrast with the Ruperts and on a scale even greater than the Bekkers, the Gupta family has been entirely reliant for their wealth accumulation on corrupting parts of the post-apartheid state. In particular, they have targeted key parastatals and certain provincial governments. 

The Ruperts and Bekkers appear to have at least some degree of commitment to South Africa (perhaps to a past-era SA), for both  wealth preservation and sentimental cultural reasons. (Rupert is reported to have cancelled all Richemont advertising in an overseas publication that once crassly described Afrikaans as “the ugliest language in the world”).  

The Ruperts and Bekkers repatriate some of their considerable global earnings back into South Africa, not out of any genuine patriotic commitment to the new SA, but for profit reasons. By contrast, the Gupta family is shipping its ill-acquired wealth (and possibly themselves) post-haste out of the country to Dubai in anticipation of a loss of political influence in the near-term.

This does not make the Ruperts or the Bekkers nicer capitalists than the Guptas, it just means that they have somewhat different strategic agendas. The Guptas attempted move on Treasury back in December was the final straw that provoked established monopoly capital into action. The past days cutting of links with the Guptas’ Oakbay company by the banks, SASFIN and KPMG, all of whom had been happy to work with the Guptas up until that point, underlines the opportunism of these forces.

Whatever its residual commitment to South Africa, established monopoly capital, with its roots in successive white minority regimes, has locked our political economy into a semi-peripheral, mineral exporting role within the global market. It is a path dependency now in deep trouble, reproducing de-industrialisation, the squeezing out of small enterprises, and crisis levels of unemployment, poverty, household indebtedness, and inequality.

We cannot, as a country, engage actively in a transformation struggle against this ruinous path-dependency without a strategically disciplined and developmentally oriented state, including an effective treasury and SARS.

We have, therefore, to deal with the parasitism of the Guptas and others, while at the same time prising lose key state institutions like Treasury from the corporate ideological hegemony of monopoly capital. A defence of treasury against parasitic predation must not simply become a falling in line with the kind of monopoly-dominated, market enslavement Garrow, Rupert and Bekker, in their different ways, clearly have in mind.

Comrade Jeremy Cronin is SACP 1st Deputy General Secretary. This piece was first published by The Star (13 April 2016).

This is the version that subsequently appeared in Umsebenzi Online, the online journal of the SACP.