Umsebenzi Online Volume 21, No. 02, 16 February 2022. Red Alert: The state has a key role to play in South Africa
SACP South African Communist Party
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Umsebenzi Online Volume 21, No. 02, 16 February 2022 Online voice of the South African working-class |
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The state has a key role to play in South Africa |
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Umsebenzi Online
In his State of the Nation Address he delivered in Cape Town on Thursday, 11 February 2022, President Cyril Ramaphosa asserted that “We all know that government does not create jobs. Business creates jobs”. The SACP[i] characterised the assertion as fatally flawed. In this intervention we briefly reflect on two flaws regarding the assertion. The first is neo-liberalism, the roots of the assertion. The second flaw lies in the inconsistency of the assertion in relation to the South African reality in its historical context.
Neo-liberalism
To start with, the “We all” in the assertion is not inclusive. It is exclusive to those who subscribe to the ideology of neo-liberalism to which the assertion can be traced. Its roots date to classical liberalism, which in the 19th century developed into neo-classical liberalism. In 1929 to 1933, there was a major crisis. Called the Great Depression, the crisis dealt a blow to many assumptions the right-wing ideology propagated.
At the end of the 1930s, to be specific in 1939, World War II broke out. After the war, which ended in 1945, a different current emerged, including economic regulation, with the state playing a key, and in many respects also a leading, role in driving economic reconstruction and development. This period, which was among others characterised by high economic and employment growth, would later be known in economic history as the “Golden Age”. During this period, one of the major influences within the framework of capitalist production, especially in Western Europe, came from Keynesianism.
Neoliberalism emerged in the 1970s and intensified afterwards in response to the endemic crisis of the capitalist mode of production. Regarding this, in his book titled the Unholy Trinity: The IMF, World Bank and WTO[ii], Richard Peet, a Professor of Geography at Clark University noted:
“Neoliberalism relates positively to its nineteenth century ancestor, but critically to its twentieth-century predecessor, especially social democratic Keynesianism. So the classical liberal past is remembered in the neoliberal present not merely as received wisdom, but also through a series of creative re-enactments that respond to changed circumstances. Hence contemporary neoliberalism’s obsession with the deregulation of private enterprise and the privatization of previously state-run enterprises, this time in critical reaction to Keynesian social democracy rather than liberalism’s earlier reaction to mercantilism.” (p. 9)
The neo-liberal agenda pushed liberalisation and a host of other measures coalescing around weakening, withdrawing or uprooting state participation in the economy, to replace it with competition by private wealth accumulation interests. This is what of late those pushing the agenda refer to as “modernisation”. State-Owned Enterprises (SOEs), the industrial spaces and/or the infrastructure networks that they control are among the key targets of penetration or capture by the private wealth accumulation interests served by neo-liberalism.
The state and employment in South Africa in its historical context—the synopsis
Before we proceed on this score, let us first acknowledge that there is significant private sector employment in South Africa, but that this does not mean that the state does not create employment. The state creates employment through policy as well as, as we highlight, through direct participation in the economy. It is also important to underline what the SACP said.
Workers find work in profit-driven businesses only so long as their labour increases capital for accumulation by their owners. This is one of the drivers of economic exploitation and inequality. It is also a reason those businesses retrench workers not only to build profitability but also to maximise profits. In the second quarter of 2020, for instance, 2.2 million workers were retrenched in South Africa, in the face of the global COVID-19 pandemic when they desperately needed work and income security.
Therefore, not only does profit-driven business create employment to facilitate private wealth accumulation by its owners, on the one hand, but also creates and increases unemployment in defence of the same agenda, on the other hand. A state that does not intervene in this scenario does not have the interests of the majority of its people, the working-class, including the unemployed, at heart.
Successive oppressor regimes that dominated South Africa through colonialism and apartheid before 1994 created and expanded state participation in the economy, including in the productive sector. To name but a few, the following SOEs were created before 1994, namely Iscor (one of the largest steel manufacturers), the South African Broadcasting Corporation widely known as the SABC, the Land and Development Bank of South Africa also known as the Land Bank, the Industrial Development Corporation of South Africa also known as the IDC, Eskom, the Development Bank of Southern Africa also known as the DBSA, the South African Airways also known as the SAA, the Airports Company of South Africa also known as Acsa, Denel, the South African Forestry Company also known as Safco, and Telkom.
Besides through government and other state services, at all levels, through these and other SOEs, the state both DIRECTLY created employment and supported investment in the economy. These and other SOEs also played a key role in skills development, producing multi-skilled artisans, technicians, engineers and other critical skills through apprenticeships, experiential training and other workplace training programmes.
The problem during the colonial and apartheid era is that the state, which oppressed and marginalised the black majority, was racist and based on this placed supporting its white constituency base above all else. Both through policy and direct participation in the economy, the regime focused on addressing the plight of the white workers and meeting the capital accumulation or investment requirements of the white bourgeoisie, both Afrikaner and British, who supported and in turn benefited from their support of the regime.
After 1994 there were affirmative action changes. Although these changes are still far from realising the vision of non-racialism and non-sexism, looked at in its totality, the reality is that the state is still creating employment in South Africa by employing many workers in national, provincial and municipal SOEs, agencies, other public establishments and institutions, including public colleges, universities, and related institutions.
It is also a fact, as the SACP said, that from a value chain perspective every person employed in a tender or contract awarded by the state or a public entity, that person is in a state created employment. These workers are among those included in the disaggregated private sector employment figures ideologically thrown around. Going forward, the disaggregation is crucial for the state to communicate the real picture regarding employment creation in South Africa.
State participation in the South African economy after 1994 increasingly came under attack from the neo-liberal policy regime comprising among other measures privatisation (continuing where the apartheid regime left when it realised that its days were numbered), outsourcing, and deprivation of adequate recapitalisation, through fiscal policy. If truth be told, the democratic government must actually be worried because, compared to the colonial and apartheid regimes, it has failed to build and increase state participation in the economy as part of its strategies to address the plight of its constituencies.
This is the context in which, besides global crises such as the global COVID-19 pandemic, there are approximately 12.5 million unemployed active and discouraged work-seekers in South Africa, of whom the overwhelming majority is black, women and youth, with Africans the worst affected. It is also in this context, compounded by state capture and other forms of corruption, that a gulf of social and political distance has emerged between the ANC as the governing party based on the performance of the government (on crucial aspects such as employment creation) and the historical constituency that has previously voted for the ANC to win elections. This gulf is evident in the declining electoral support of the ANC. If this scenario continues, the ANC will be dislodged as the governing party in more areas and in other spheres of the government than in the municipalities it has already lost power.
The masses cannot identify with the neo-liberal language that has become dominant in the vocabulary of the leaders, which is driven by the National Treasury and the Reserve Bank, and now transmitted by the President, such as that the state does not create employment. The private sector in South Africa is still predominately controlled in ownership terms by those who benefitted from apartheid in relation to its domestic composition. It is to the private wealth accumulation interests, in the prevailing environment of overwhelmingly untransformed patterns of ownership, that the message coming out refers the unemployed to look for work, telling the masses it is not the state that creates employment.
The workers also want ownership in the economy, not just work to enrich others in their profit-driven business. The state, like the owners of private businesses, is not in terms of our constitution prohibited from property rights. It has a key role to play in empowering the masses who have no capital of their own to develop ownership in the economy, including through developing a thriving co-operative sector. The co-operative sector that was developed under the colonial and apartheid era was developed to serve their constituencies.
[i] SACP initial response to the State of the Nation Address (Cape Town, 11 February 2022) https://www.sacp.org.za/content/sacp-initial-response-state-nation-address
[ii] First published in 2003 by Zed Books in London, the United Kingdom.