Join us at the University of KwaZulu-Natal Centre for Civil Society, and
in cyberspace:
Seminar: The US financial meltdown, Part 2: Implications for South Africa
Speaker: Patrick Bond
Date: 31 October, 2008
Time: 12:30-2pm (six hours ahead of US Eastern Standard Time)
Venue: CCS/SDS Boardroom, Memorial Tower Building Room F208, University
of KwaZulu-Natal Howard College Campus
In the second of three seminars, Patrick Bond explores the implications
of the current financial meltdown for the South African economy and for
the government's global financial reform strategy. SA has been named (by
the New York Times) as one of a dozen "endangered" emerging economies,
and already the rand and Johannesburg Stock Exchange have suffered
enormous crashes. But is the worst over? What about the enormous real
estate bubble - three times larger than that of the USA? What of the
current account deficit - second worst in the world in 2008? What of the
sickly manufacturing economy and steroid-stocked financial sector? Are
the financial institutions safe and will $30 billion in foreign reserves
be enough? Will capital flight worsen? Are massive new World Bank and
IMF loans on the cards? Has Trevor Manuel succeeded in any of his stated
Bretton Woods reforms and are these now more or less viable? At home,
does the new Zuma/Motlanthe government have any room to maneuver on
matters such as exchange controls, fiscal expansionism, social
programmes, strategic nationalisation and inflation targeting? (The
final seminar, tentatively scheduled for 7 November, deals with
global/local social resistance to financial devalorisation; the first
seminar paper/presentation is here:
http://www.nu.ac.za/ccs/default.asp?11,61,3,1624.)
Bond is professor of development studies and director of CCS, and author
of books and numerous academic articles about the interrelationships of
global and South African political economy. Books include Talk Left,
Walk Right: South Africa's Frustrated Global Reforms (UKZN Press, 2006);
Elite Transition: From Apartheid to Neoliberalism in South Africa (Pluto
and UKZN Press, 2005); and Against Global Apartheid: South Africa meets
the World Bank, IMF and International Finance (Zed and UCT Press, 2003).
He authored a short article on the topic in the current Financial Mail
(below) and has produced other recent papers on the crisis, available at
http://www.ukzn.ac.za/ccs. Bond was a policy drafter for the South
African government between 1994-2002, and is presently assisting Cosatu
with National Health Insurance costings.
[This seminar will be skypecast; contact pbond@mail.ngo.za to rsvp a
space, and send a skype message to patricksouthafrica]
Left learns lessons
by Patrick Bond
(Financial Mail, 24/10/08)
The crash of world markets and South Africa’s own extreme volatility
tempt radical political economists (like myself) to crow ‘I told you so’
about capitalism’s internal contradictions and even to proclaim the ‘end
of capitalism as we know it’. But is this somewhat hasty?
No and yes. During a five-hour meeting with visiting ‘World Forum for
Alternatives’ leftists in Caracas on October 15, Venezuelan president
Hugo Chavez chuckled about ‘Comrade Bush’ nationalizing US banks.
Enervated, the chair of the parliamentary environment/tourism committee,
ANC/SACP stalwart Langa Zita, asked Chavez to support the ideological
revitalization of oft-discredited African socialism, and he received a
warm affirmation.
Socialist ideology does indeed need an open-minded relook, because
Marx’s Das Kapital brilliantly foretold the range of crisis tendencies
associated with long-term stagnation in productive sectors accompanied
by financial follies and property market bubbling. The pricing of paper
assets far higher than their underlying value is intrinsic to an
anarchic market system, whether in Wall Street or Sandton.
Latter-day Marxists like our Caracas conference hosts – the great
Egyptian economist Samir Amin, Belgian sociologist Francois Houtart and
Carmen Bohorquez of the Venezuelan ministry of popular power and culture
(sic) – confirmed that the problem is capitalism, and not the litany of
surface problems that FM readers might prefer: incompetence, greed,
corruption, reckless borrowers, excess deregulation of financial
derivatives, or plain old US hubris.
Digging deeper, the celebrated poetry of anti-apartheid activist and
literary scholar Dennis Brutus captures this mood of ruthless critique,
but also of hope. Indeed, Brutus – based at our University of
KwaZulu-Natal Centre for Civil Society - has been performing the solo
play ‘Marx in Soweto’ – around the world, based on US historian Howard
Zinn’s cheeky biographical self-appraisal.
Bearing more than a passing resemblance to Karl, Brutus will shock New
York when he brings the show to Wall Street next month, in the course of
his periodic visits to the Southern District Court. There, Brutus stands
in for thousands of SA plaintiffs demanding that three dozen
multinational corporations pay $400 billion in apartheid reparations for
earning profits from a ‘crime against humanity’.
Beginning in July 2003, the likes of Thabo Mbeki, Aziz Pahad, Brigitte
Mabandla and Penuell Maduna began lining up as a friend of the court -
on the side of the corporations and the US, UK and German governments,
in the process inviting ridicule from Archbishop Emeritus Desmond Tutu
and Nobel Laureate Joseph Stiglitz.
That is just one of the sites of financial conflict where we see, stark
naked, that ‘executive committee of the bourgeoisie’, Marx’s clumsy
description of Pretoria, Washington London, Berlin. US treasury
secretary Henry Paulson’s socialisation of bank losses and attempt to
privatize profits is the most extreme form.
But Trevor Manuel, too, has promoted crony capitalism for feckless
financiers. How else did he generate one of the world’s highest current
account deficits, and more deep currency crashes (1996, 1998, 2001,
2006, 2008) than any other finance minister in the world outside Zimbabwe?
A huge problem is the erosion of capital controls, with 26 consecutive
relaxations from 1995-2008, beginning with the abolition of the
financial rand dual currency. In a letter circulated last week, SA
Reserve Bank official Brian Kahn posed ‘the old question whether or not
exchange controls work. The conventional wisdom is that they do not,
particularly when you need them to work. We seem to have been exception
to this rule.’
True? Every local saver must be pleased, as Kahn put it, that ‘banks
cannot hedge transactions that are not SA linked. Effectively it meant
that our banks could not get involved in the toxic assets floating that
others were scrambling into.’
Still, SA Communist Party leader Blade Nzimande appealed to the Alliance
economic policy summit last weekend that controls should be tightened.
This would have protected against hot money speculators who
decapitalised beginning on 23 September (Manuel’s resignation letter
release), alongside SA’s largest corporations, formerly based at the
Johannesburg Stock Exchange but relisted in Britain, the US or Australia.
Their loot’s out, thanks to the lack of controls. However, much more
financial froth remains to clear away. South Africa’s real estate
bubble, for example, was blown far higher than any other major site: 200
percent from 1997-2004, compared to 60 percent in the US.
Next comes more global austerity: with so much public money bailing out
the banks and SA’s finances also stressed, we can expect ongoing
privatization pressure, neoliberal state-shrinking techniques, and
attacks on the social wage.
Hence the regular crashes capitalism suffers in both financial and real
sectors do not justify a leftist declaration of victory, not until the
masses hit the streets.
After all, Manuel is likely to join G8 leaders, plus China, Brazil and
India in New York next month for a ‘new Bretton Woods’ summit,
ostensibly to sanitise world capitalism of its worst Americanised
features (hedge funds and offshore financial centres), according to
French president Nicolas Sarkozy.
Popular anger will grow that the same arsonists who set the financial
fire intend to put it out. Will activists try a Seattle-style protest,
which left the World Trade Organisation summit paralysed nine years ago?
With SA’s world-leading protest rate - above 10 000/year since 2006
according to police - at the very least a revival of the Seattle spirit,
fighting global capital, appears feasible. Yet from protest to a genuine
change in the mode of production is a long way along the road the
financiers have been potholing for us all.
(Bond directs the UKZN Centre for Civil Society.)
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Received on Tue Oct 28 11:58:10 2008
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