[OPE] A debate on capitalist crisis in Joburg today (between agreeable people)

Even though no one on the list other than Patrick will probably be able to
attend
this event, you might be interested in the exchange below.
In solidarity, Jerry

----- Original Message -----
From: "Patrick Bond" <pbond@mail.ngo.za>
Sent: Wednesday, January 28, 2009 11:32 AM
Subject: A debate on capitalist crisis in Joburg today (between agreeable
people)

> JOE SLOVO MEMORIAL LECTURE
> The Chris Hani Institute [CHI] will be hosting a public lecture as part of
> celebrating the life and times of Cde Joe Slovo, the late National
> Chairperson of the SACP and ANC NEC Member. Cde Joe Slovo was a paragon of
> our revolution and chief architecture of our nascent democratic
> dispensation. The Deputy General-Secretary of the SACP, Cde Jeremy Cronin,
> will deliver the key main lecture under the strategic topic “The current
> financial crisis and possibilities for the left”, and Prof Patrick Bond,
> UKZN Director for Centre for Civil Society will be a respondent.
>
> The details of the public lecture are as follows:
> DATE : Wednesday 28 January 2009
> TIME : 10h30
> VENUE : COSATU Hse, 10th Floor, 1 – 5 Leyds Street, Braamfontein
> Issued by Chris Hani Institute [CHI]
> Below is Cde Jeremy Cronin’s prepared paper:
>
> Jeremy Cronin
>
> Paper delivered to the Chris Hani Institute seminar on
> “The current financial crisis and possibilities for the left”
> 28th January 2009
>
> Introduction
>
> In 1906 a gifted young South African studying in the United States won
> first prize in a Columbia University debating competition. His speech was
> entitled “The Regeneration of Africa” and it began with the assertion: “I
> am an African”. The speech is a remarkable lyrical hymn to progress. It
> was speaking out of a particular ideological illusion of the early
> twentieth century. The speech is dizzy with the sense of huge
> technological advances, rail-lines traversing continents, the telegraph
> system girdling the planet, steam-ships crossing the oceans. These
> advances, so the speaker believed, were finally making the world a single
> and united reality. The speech then called for an “African regeneration”
> that would ensure Africa was not left behind in this apparently marvellous
> new era that had opened up.
>
> The prize-winning debater was Pixley ka Isaka Seme, who, less than six
> years later, was to be one of the founding fathers of the ANC. Re-read
> more than a century later, the speech remains deeply moving. But, as we
> can now see with the benefit of hindsight, its hopes were to be shattered
> and its illusions cruelly exposed by the white minority colonial
> settlement in SA in 1910, by the outbreak of a vicious intra-imperialist
> war in 1914, and by the spectacular global capitalist crisis that began in
> 1929.
>
> The next phase of accelerated imperialist globalisation was to occur in
> the mid-1970s through to the present. Here in South Africa, in the
> mid-1990s, towards the tail-tend of this next phase of accelerated
> globalisation, an incumbent ANC leader was to invoke the Seme legacy.
> Sharing the same fundamental illusions of limitless progress, of a new
> global dawn, Mbeki was even given to styling much of his own prose on Seme’s
> youthful speech. Once again, the inability to appreciate the dialectical
> character of world capitalism’s trajectory, was to lead Mbeki (like Seme
> before him) to gravely misread the global situation, to imagine an
> “African renaissance” based on catching-up and aligning ourselves to the
> “West”, with the promise of an ineluctable, evolutionary way forward –
> “today is better than yesterday, and tomorrow will be better than today.”
>
> The illusions of a young Seme more than a hundred years ago were, perhaps,
> understandable and forgivable. Can the same be said of the grave strategic
> misreadings and errors that proliferated within our own country and
> movement in the past decade? Have we sufficiently appreciated these errors
> and taken adequate corrective measures?
>
> The world capitalist system is now in the midst of its worst economic
> crisis since the early 1930s. To be sure, capitalism is seldom free of
> crisis. There have been many crises in the recent past – among them Mexico
> 1982, Japan 1990, and East Asia 1997/8. But the current crisis is
> different in many respects. In the first place, its epicentre is in the
> core zones of capitalist accumulation – the US, continental Europe, the
> UK, and now, increasingly, Japan. It has struck at the heart of the
> financial system. Its knock-on impact across the world is, therefore, much
> more profound. Given the intensified global interconnectivity (compared to
> the 1930s), the speed and reach of the knock-on impact is also greatly
> enhanced. While some economies will continue to grow (notably China) but
> at a much lower rate (now revised down to a possibly optimistic 7.5% for
> 2009 – the lowest in nineteen years), large parts of the world have
> already entered into recession, or are poised on the brink of recession.
> Tens if not hundreds of millions of jobs are being lost, homes
> repossessed, businesses liquidated and value destroyed.
>
> Marx was the first to provide a scientific analysis of the boom-bust cycle
> in capitalism, which he showed to be endemic to this mode of production.
> Crises in capitalism can occur as a consequence of factors extraneous to
> the accumulation process –wars, natural disasters, social upheavals.
> However, under capitalism (and in contrast to earlier forms of production)
> wars, natural disasters or social upheavals are more likely to be the
> consequences of intrinsic crises within capitalism rather than the
> fundamental causes of its crises.
>
> The cyclical pattern of booms and busts are systemically linked to the
> fact that capitalism – unlike socialism or earlier forms of production –
> is essentially production for exchange (and therefore private profit) and
> not for social use. In other forms of production (not least socialism)–
> over-production of goods would, in principle, usually be a cause for
> celebration, but under capitalism “over-production” (i.e. more than the
> market demands – i.e. more than can profitably be sold) triggers a
> break-down in the system – a crisis of over-accumulation. This, in turn,
> requires a massive wave of destruction of productive capacity (in the form
> of retrenchments, factory closures, liquidations, and stock exchange
> collapses), in order to “clear the ground” for the next round of capital
> accumulation through growth. It must be stressed that under capitalism
> “over-production” is not the over-production of products that the mass of
> the world’s population often desperately needs. It is “over-production”
> relative to “market demand”, i.e relative to what can profitably be
> sold.[1] Capitalism, for all its dynamism and robustness, is a profoundly
> irrational system.
>
> In recent times, liberal economists have boasted that with effective
> macro-economic modelling and management, together with some supposedly
> inherent self-correcting capacity within capitalist accumulation, we have
> been able to “transcend” the boom-bust cycles of capitalism. Ricardo
> Hausman, leader of Trevor Manuel’s “Harvard Group”, for instance,
> presented a celebrated paper in 2005 along with a fellow Harvard luminary.
> In it, they claimed that financial “dark matter” would prevent a big bang
> in the world economy. The failure to believe in this “dark matter”, the
> authors boasted, made “analysts predict crises that, for good reason,
> remain elusive.” All of these boasts now ring hollow.
>
> Booms and busts
>
> Over the past 500 years of modern capitalism, it is possible to detect
> three broad (but inter-linked) variants of boom and bust, of cycles of
> rise and fall:
>
> · relatively short-term cycles of around a decade or so. In the recent
> period the global economy has gone into a slump in 1974/5, 1980/2; 1991/3
> and 2001/2. In SA the last decade of apartheid corresponded to a domestic
> downturn/recession and post-1994 we have seen a general economic upturn.
> This upturn is variously attributed to “sound economic policies”, and the
> “political miracle”, etc. While subjective factors like policies are not
> unimportant, and while the political settlement has been a key ingredient
> in this upturn, it is important to notice that this cyclical upturn has
> also had an underpinning of objectivity related to our particular
> capitalist accumulation path. This local upturn is now likely entering
> into a period of several years of downturn if not actual recession. We
> obviously make this point, in order to prepare our defences against what
> is likely to be a political discourse in the coming years – blame a
> largely “objectively” (and externally) determined downturn on “Polokwane
> populism”.
>
> These shorter term cycles, and their national/regional characteristics are
> related to the particular features of a national/regional economy,
> including its positioning and insertion within the global capitalist
> economy, and, therefore, they are not unrelated to longer-term cycles in
> the world system
>
> · These long-term cycles at a global level are sometimes called
> “Kondratieff” cycles – after the economist who first noted and analysed
> them. Over the past 500 years there has been a remarkably consistent
> cyclical pattern, occurring roughly over 50 year periods – with booms and
> growing profit occurring over a 25 year period, followed by another 25
> year period or so of generally diminishing rates of profit, of deepening
> crisis and decline. The present long-term cycle in the world capitalist
> system began in 1945, with the upswing reaching a turning point around
> 1970/3. Since then, globally, we have been in a long downturn – somewhat
> longer than normal, partly because capitalist-aligned economists and
> central banks and multi-lateral institutions (like the IMF), believing
> that they had finally “beaten” recession forever, introduced a range of
> interventions which we can now see have simply temporarily displaced the
> epicentre of crisis into semi-peripheral regions, thus delaying and
> deepening the full-blown crisis in whose midst we now are.
>
> Finally, there is another, often even longer term cyclical (or rather rise
> and fall) tendency within capitalism:
>
> – The geographical shift in hegemony. Marx, Lenin and others following
> them have demonstrated how capitalist development is characterised by high
> degrees of combined and uneven development. It is a global system
> characterised by geographical zones of various importance within the
> accumulation process – core zones, semi-peripheral zones, and marginal or
> peripheral zones. Within this hierarchical system there is a tendency for
> a single zone/region or country to emerge as the dominant hegemon. Over
> the past 500 years, if we are to begin in what was still largely
> mercantilistic capitalism, the hegemonic centre of capitalist accumulation
> has shifted from the Italian city-states (notably Genoa), to the
> Netherlands (mid-17th century) and to Britain. Since 1870, the US has
> positioned itself as a challenger to British hegemonic domination, and
> since 1945 the US has been the uncontested dominant capitalist power. The
> emergence of a hegemonic power is usually characterised by a greater
> productive and technological dynamism than its rivals. In its declining
> years (and the decline might last for a long period), core centres of
> production shift to other localities, and the economy of the waning
> hegemonic power is increasingly characterised by “financialisation” – the
> increased investment of surplus out of production (and therefore out of
> job creation and wages) into speculative activity. This pattern is evident
> in all hegemonic societies, and since the early 1970s, as US hegemonic
> dominance has begun to wane, a ballooning financialistion process has been
> evident there, manifest in many things including a dramatic widening in
> the gap between the share of surplus going to profits and that going to
> wages.
>
> In addition to these three “rise and fall” patterns typical of capitalism,
> there is a fourth factor that needs to be borne in mind when considering
> the current crisis in the global capitalist system.
>
> Approaching the bio-physical and geographical limits to capitalism?
>
> The capitalist accumulation process is premised on ever-expanding growth
> and the illusion of limitless resources. However, there are absolute
> limits to capitalist production and reproduction (and, indeed, to any form
> of human civilisation). There is now a well-established scientific
> consensus that our present global economic trajectory is leading human
> civilisation towards catastrophe – with the depletion of non-renewable
> natural resources, the destruction of the environment, global warming and,
> therefore, the bio-physical preconditions for human survival. Capitalism
> and formerly existing socialism both shared the illusion of limitless
> natural resources available for ever-expanding exploitation. Today,
> socialist Cuba is setting an important example of an entirely different
> approach to sustainable development. On the other hand, while many leading
> politicians in capitalist countries are beginning to express grave concern
> about the future of our planet –denialism; or market mysticism (somehow
> the hidden hand of the market will find a solution); or a cynical, even
> genocidal, social Darwinism (“don’t worry there will be losers but there
> will also be winners”); or hopelessly inadequate piecemeal reforms remain
> the order of the day.
>
> In addition to the bio-physical limits to capitalism, there are also
> struggle-determined potential limits to the expanded reproduction of
> capital. Capital needs constantly to intensify and expand its exploitation
> of labour power – it does this in several ways, forcing workers to work
> longer hours; increasing the productivity of labour through technological
> advances; or attempting to roll back the social wage (for example, the
> welfare state). The relative success of any of these profit-maximising
> interventions depends on the ability or otherwise of labour and popular
> forces in general to resist the intensification of exploitation.
> Critically in the current era of “globalisation”, various forms of
> geographical displacement have also been key factors in this pursuit of
> the expanded reproduction of capital. In particular, in the current era,
> capital has relied to a considerable extent on lowering the cost (to
> capital) of the reproduction of labour power by relying on Third World
> survivalist and peasant economies to carry much of the burden of this
> reproduction. Thus we have seen the vast expansion in the last decades of
> variously coerced and regulated forms of mass migrancy (whether “cheap
> labour”, or the “brain drain” from the Third World). Or, the flip-side of
> the latter, through the geographical displacement of production to new
> localities where labour is “rightless” and “disciplined” in various ways
> (this happened with the flow of FDI into apartheid SA after 1963, Brazil
> under the military junta from the mid-1960s, and Chile from 1973 under
> Pinochet, and, under a somewhat different reality, it has been a key
> feature of Chinese growth in the last decades).
>
> However, as in South Africa, or Brazil, or South Korea in earlier periods,
> and as is now happening in China,[2] it tends to take a generation or so
> for workers to organise (or regroup and re-organise) for better wages,
> working conditions and social wage measures. In the coming period, the
> intensifying class struggles unfolding within China, and within the
> Chinese state and ruling party itself, will have a decisive impact upon
> the chances of a re-configuration (or otherwise) of the global economy.
>
> The present crisis – “a perfect storm”
>
> The present global crisis is particularly severe because it involves the
> confluence in differing degrees of all four of the systemic factors
> considered above:
>
> · short-term cyclical downturns, converging with
>
> · a longer-term downward trend, coinciding with
>
> · a global hegemon now in full decline; all shadowed by
>
> · the already detectable impact of approaching bio-physical and perhaps
> social limits to the expanded reproduction of capitalism.
>
> For around 100 years (1870 to 1970) the US witnessed an unprecedented
> trend of rising productivity and rising real wages for the working class.
> This economic reality lies at the basis of the “American dream”, and of
> the “consumerism” and relative passivity of the US working class – a car
> and a suburban home being the epitome of the American “way of life”. Since
> the early 1970s, the US’s hegemonic domination has been challenged by
> Japan and the Asian Tigers and some key European economies - leap-frogging
> in terms of technological and industrial plant investments, rendering US
> industrial plant (fixed investments) increasingly unprofitable. This has
> led to US capital moving to other locations OR moving into increasingly
> speculative financial activities. At the same time, US mass consumerism
> has been kept afloat through increasing credit, despite declining real
> wages since the early 1970s.
>
> Export-oriented Asian (especially Chinese) manufacturers and Third World
> oil producers became the production sites while US consumption propped up
> global market demand. The US has been running huge current account
> deficits – by 2006 the US current account deficit was at $800bn (or 6% of
> GDP). China, conversely, has played a crucial role in financing this US
> deficit, and therefore US consumption. China has now accumulated the world’s
> largest foreign exchange reserves ($1.9 trillion, at least $650bn of which
> is in US treasury bonds). In theory, China could pull the plug on the US
> economy, but a move to sell these assets would further damage China’s
> export industries, giving us a situation which some economists have
> described as a “mutually assured economic destruction” capacity on both
> sides.
>
> This symbiotic but unsustainable reality premised on growing US
> consumption was further propped up by a variety of “creative” financial
> instruments developed largely by the US financial sector. Among these were
> “sub-prime loans” – housing loans to those who basically could not afford
> them, in which the initial interest rate was sub-prime, but with the
> interest rate escalating over the duration of the mortgage on the
> assumption that as the borrower progressed career-wise so there would be
> an increased capacity to pay instalments. (Note that this is not very
> different from many BEE deals – in which black “investors” acquire shares
> on loan, on the assumption that the shares will always go up and they will
> be able to repay the loan). These sub-prime loans were then “diced and
> sliced” (i.e. mixed up with other more viable loans) and sold on by the
> direct mortgage institutions to banks and other financial institutions.
>
> The collapse of the sub-prime market has been the catalyst of the present
> all-round crisis. It has seen one of the top four investment banks in the
> US, the 100-year old Lehman Brothers collapsing, and other banks and the
> mortgage lenders (Fanny Mae and Freddy Mac) having to be rescued, often
> through nationalisations. The dicing and slicing of sub-prime and other
> toxic loans has meant that major financial institutions in the US and
> Europe, in particular, have no idea of what they are sitting on. This has
> led to a reluctance of banks to lend to each other, and liquidity in the
> real economy has dried up. Major global manufacturers (like Nokia, for
> instance) can still access cash from banks, but their hundreds of small
> suppliers cannot get loans and production across the globe is being
> impacted. On top of this, demand in the US and Europe is in recession, and
> this is impacting heavily on major global manufacturers, like China where
> there have already been hundreds of thousands of retrenchments. The Indian
> government is predicting 10 million job losses in its export industries
> over the current year.
>
> In many respects we are in uncharted waters, and no-one can say for sure
> exactly where it is all headed. There are, however, a few basic
> predictions we can make:
>
> * There will not be any significant short-term recovery;
>
> * Although the world capitalist system is in a grave crisis – it would be
> naïve to assume that capitalism will simply collapse, or that the crisis
> will spontaneously give birth to a better world;
>
> * The relative decline of US economic supremacy (which has been slipping
> since the mid-1970s) has now been greatly accelerated. The US will
> probably still emerge as the most powerful economy, but the world will
> have become significantly more multi-polar.
>
> * While multi-polarity offers possibilities, potentially more breathing
> space and alternatives, for the global South, it is the people of the
> South who will bear the burden of the crisis. For instance, as the core
> capitalist economies focus on their own crises and their own stimulus
> packages, already paltry development aid is diminishing; trade protective
> barriers are going up; FDI is pulling out of much of the South; premiums
> on international loans have increased; and portfolio investments are even
> more disinclined to bet on the South. It is not just the core capitalist
> economies that are retreating out of the South. For instance, more than 60
> Chinese mining companies have left the DRC’s Katanga province in the past
> two months as mineral prices collapse, and 100 small Chinese operators are
> said to have left Zambian mines (Jeffrey Herbst & Greg Mills, “Africa’s
> left to face commodity price storm largely on its own”, Business Report,
> Jan 22, 2009)
>
> * It is possible that dynamic developing economies like Brazil, India and
> China may be partially de-linked (de-coupled) from the recession, but none
> will escape its impact. China, with its US oriented, export-led growth
> strategy will face very serious challenges
>
> South African challenges - From the “unthinkable” to the “unmentionable”
>
> The global economic crisis presents the left with major possibilities but
> also serious challenges. Here in South Africa, transformation of our
> productive economy has become all the more necessary. But it will also
> become more difficult as declining global demand for our exports will
> impact on jobs and on state fiscal resources.
>
> We will also encounter an intensified ideological battle, from those
> outside of the ANC, and indeed from within the ANC itself. With their
> backs to the wall, but with massive resources, our resident neo-liberals
> of all stripes are fighting an ideological battle to prevent any sensible,
> democratic debate opening up within our country on economic policy
> evaluation and change.
>
> We have been here before. In the critical 1994-1996 period, a similar
> ideological battle was waged to capture the new government’s economic
> policy agenda. This included demonising, caricaturing and belittling
> alternative perspectives, especially when they came from the SACP and
> COSATU. It also included constant threats about what “global markets”
> would do to us if we dared challenge anything in the neo-liberal gospel.
> This theme was repeated over and over.
>
> And that is exactly what is now being repeated – except last time, we were
> being told there were no alternatives to the Washington consensus. Now, we
> are being told that the crisis of this very same economic agenda is so
> great, that we had better not risk changing anything.
>
> This was exactly the parting shot from the outgoing deputy finance
> minister, Jabu Moleketi, speaking in the week before the October 2008,
> alliance economic summit. He told the London Financial Times that it would
> be “suicidal” for South Africa to change economic policies: “Any sudden
> policy shifts by South Africa’s new leaders would be ‘suicidal’ for a
> country whose economy survives at the mercy of foreign investors,
> according to one of the architects of the recent years of stability.”
> (October 7, 2008)
>
> Notice the sleight of hand in this sentence. On the one hand, we are told
> that our economy has achieved “years of stability”, and on the other, we
> are told it “survives at the mercy of foreign investors”. What kind of
> stability is that? But according to one of our architects of stability,
> cde Moleketi, the seas are so choppy now that we shouldn’t try to turn our
> ship around. Typical of this line of reasoning is a caricature of what we
> are actually attempting (supposedly “a total U-turn”). What we are arguing
> for is exaggerated, the better to be able to demonstrate our “lack of
> wisdom”.
>
> We might be inclined to ignore all of this, if it were not likely to
> impact on parts of the ANC and government. But, unfortunately, this is not
> something we can take for granted.
>
> Consider an interview with Minister of Finance, cde Trevor Manuel,
> conducted by the London Financial Times in the immediate aftermath of the
> same mid-October Alliance economic summit. Clearly referring to the main
> resolutions from the summit, cde Manuel speaks dismissively: “We need to
> disabuse people of the notion that we will have a mighty powerful
> developmental state capable of planning and creating all manner of
> employment. It may have been on the horizon in 1994 but it could not be
> delivered now. The next period is likely to see a lot more competitiveness
> in the global economy. As consumer demand falls off there will be a huge
> battle between firms and countries to secure access to markets." (28
> October 2008)
>
> Manuel exaggerates and implicitly ridicules the resolutions of Polokwane
> and the Alliance summit on the developmental state. (Interestingly, when
> talking to the local media, he has been more restrained). He then says
> that a major job creation programme led by a developmental state “may have
> been on the horizon in 1994 but it could not be delivered now.” In other
> words, it is no longer possible to contemplate serious state-led job
> creation programmes because of the crisis in the global economy.
>
> But what was cde Manuel saying a few years back when there wasn’t the
> global crisis? In 2000 he told the Sunday Independent: “I want someone to
> tell me how the government is going to create jobs. It’s a terrible
> admission, but governments around the world are impotent when it comes to
> creating jobs.” (9 January 2000).
>
> Then it was NEVER possible, now it is NO LONGER possible! A few years ago
> change of economic policy was supposedly “unthinkable” – now it’s
> “unmentionable”.
>
> “But is it affordable?”
>
> A variant of the “unthinkable/unmentionable” argument which was deployed
> hostilely against the RDP in the mid-1990s and which we are encountering
> once more in regard to the ANC’s 2009 election manifesto is the tired
> refrain: “it is all very noble, but is it affordable?” Indeed, the
> affordability of a strategic programme is not irrelevant. And yes, indeed,
> the global economic crisis will impact on South Africa. There may very
> well be fewer fiscal resources available to government in the coming years
> as declining profits hit tax revenue. Our existing social security net,
> which we are committed to expanding, will likely come under increasing
> pressure as global recession hits South African jobs.[3]
>
> We have to be realistic about these and other related challenges. But what
> we absolutely must not allow this time around is that the “but is it
> affordable?” refrain should be used to deflect us off our strategic and
> programmatic DIRECTION.
>
> This is what happened in the mid-1990s to the RDP. The affordability
> argument was used to intimidate comrades in government (and was used, in
> turn, by some in government). In the name of “finding the resources” to
> “deliver” on “RDP promises”, the RDP programme was dumbed down into a list
> of “delivery targets”. GEAR effectively replaced developmental
> transformation as the key priority, making stabilisation and
> re-stimulation of essentially the same century-long growth path the
> priority. “Development” was turned into earnest endeavours at
> re-distribution out of growth, while the stabilised and moderately
> stimulated growth proceeded to reproduce all the systemic features of
> racialised underdevelopment that had characterised this growth path for
> the better part of a century.
>
> This time around we are making it very clear that it is decent work and
> sustainable livelihoods (and not 6% growth, or some other arbitrary
> figure) that will be the key indicator of progress or otherwise. This, in
> turn, will require the marshalling of our resources around a state-led
> industrial policy that prioritises the transformation of our productive
> economy. Key features of this industrial policy must include:
>
> * Breaking the suffocating grip of private monopoly cartels in the
> mineral, energy, finance, chemical, and agro-processing sectors – in order
> to ensure a more balanced development of small and medium-enterprises with
> a capacity to create jobs;
>
> * Achieving a better balance between production for export and production
> for our national and regional markets; this will include ensuring that
> trade policy is governed by industrial policy (and not the other way
> around);
>
> * More effective strategic coordination of energy policy – to ensure
> greater national energy sovereignty and long-term sustainability, with as
> rapid as possible greening of our economy
>
> * Paying much greater attention to national (and regional) food security
>
> * The consolidation of our SOEs and Development Finance Institutions,
> ensuring that their strategic development mandates are aligned and clear.
>
> * Reconfiguring the state apparatus to ensure that there is effective (and
> participatory) planning in all spheres, that budget allocations are
> determined by strategic and planned priorities, that macro-economic policy
> is shaped according to our developmental priorities, and that the
> professionalism and technical capacity of the state is significantly
> improved.
>
> * Our industrial policy and broader developmental strategy should not just
> be “national” in character, but it should also deliberately embrace a
> Southern African regional and even South-South dimension. Many capitalist
> forces around the world can be expected to respond to the global crisis
> with a dog-eats-dog mentality, with an each one for themselves approach of
> the kind that cde Manuel is predicting in his Financial Times interview
> quoted above (“The next period is likely to see a lot more competitiveness
> in the global economy. As consumer demand falls off there will be a huge
> battle between firms and countries to secure access to markets.”). While
> this trend is already evident, there are also inspiring alternative
> examples from which we should learn and emulate where possible – foremost
> among them the ALBA process in Latin America and the Caribbean.[4]
>
> Integral to our developmental agenda, and in order to buttress the
> priority of job creation and sustainable livelihoods, we are further
> identifying four other areas requiring prioritised systemic transformation
> if we are to ensure sustainable transformation – health-care, education,
> rural development and community safety. These are not add-ons, but
> integral components of a developmental path to systemic transformation.
>
> It might be that deepening global recession and its impact upon our own
> economy will have consequences for the scale and the time-frames for
> meeting our strategic developmental priorities. As we proceed, we need to
> monitor and evaluate outcomes and likely forward progress on a continuous
> basis. And we need to make whatever adjustments might be required. What we
> absolutely must NOT do this time around is to compromise on our strategic
> DIRECTION and on our systemic TRANFORMATIONAL objectives
>
> To keep focused on our strategic development agenda, we need also to
> engage actively in a critique of what remain dominant illusions about our
> present national reality.
>
> MYTHS ABOUT THE SOUTH AFRICAN ECONOMY
>
> Central to the neo-liberal campaign to block serious economic debate and
> policy evaluation in our country is a series of inter-related myths about
> the state of health of our economy.
>
> Myth number one: “over the last decade South Africa has witnessed
> ‘unprecedented’ growth”
>
> It is true that since 1994 there have been 14 years of successive growth.
> Between 1994 and 2003 this growth averaged 3%. Between 2004 and 2007 it
> averaged 5%. It is now likely to dip again to 1%, if not down to negative
> growth and recession.
>
> While sustained if moderate growth is not a negligible achievement, we
> should remember that it is growth relative to the deep ditch into which
> white minority rule had finally driven the economy by the early 1990s. In
> the last decade of apartheid, there was either zero or negative growth for
> most years. To produce growth out of this low-point did not necessarily
> require rocket science.
>
> Moreover, a decade of growth is far from being “unprecedented” as is so
> often claimed. Between 1963 and 1973, the apartheid economy grew for a
> full decade at an average of 7-8%. As this apartheid-era growth should
> remind us, economic growth on its own doesn’t tell us who is benefiting,
> or even whether a high growth rate is a good or a bad thing for the
> majority.
>
> Myth number two: “we have managed our economy well since 1994”
>
> The last decade and a half has coincided with a huge surge in global
> growth. In particular, over the last years there has been a major
> commodity boom that has benefited most of our key exports. With a
> prolonged global recession now in sight, and with slackening demand for
> commodities, we have to ask ourselves whether we have used the boom years
> to place our economy on a sound, sustainable and more equitable basis? Or
> have we largely squandered the opportunity?
>
> An honest answer would have to admit that, in many respects, we have lost
> opportunities that may not return. The changed global reality does not
> make change impossible, it makes it all the more necessary. But
> transformation will now be more challenging in many respects.
>
> Myth number three: “all the basic economic fundamentals are in place…(and
> shouldn’t be tampered with!)”
>
> The smug complacency about what has been achieved over the past
> decade-and-a-half is, basically, a class complacency. For South African
> monopoly capital in general the past 15 years have been a period of great
> profitability, of a widening gap between their executive salaries and the
> wages they pay their workers. It has been a decade of opportunities to
> disinvest out of SA.
>
> For workers, however, the past 15 years have seen retrenchments initially
> soar and then level off into largely jobless growth. Unemployment peaked
> close to 40% and is now stuck around 33-35%. There has also been
> wide-scale casualisation, so that those in employment often find
> themselves below the radar screen of progressive labour market
> legislation. The past 15 years have also seen widening income inequality,
> making SA one of the worst performing countries in terms of the GINI
> coefficient measurement of income inequality. However, important social
> programmes (including grants, low cost housing and water and electricity
> provision) have helped to lessen absolute levels of poverty.
>
> The idea that economic “fundamentals” can be reduced to a few
> macro-economic indicators, while ignoring unsustainable levels of
> unemployment and inequality, is a class-biased assumption.
>
> Myth number four: “owing to sound economic management, South Africa is a
> safe haven in the current global turmoil”
>
> In its 78th Annual Report, published in June 2008, the Bank of
> International Settlements rated South Africa (along with Turkey, the
> Baltic states, Hungary and Romania) as one of the states most at risk in
> the current turbulent global reality. Of course, the fact that the BIS
> made this finding should not necessarily lead us to accept it as gospel –
> the BIS failed to remotely predict the impending scale of bank failure in
> the US. But the BIS report should certainly give us pause for thought.
>
> The BIS finding was based in particular on SA’s precarious current account
> situation (the difference between our export earnings and import
> expenditures). Since the June report, our current account deficit has
> worsened. In October 2008 our trade deficit widened to R7,1bn, largely as
> a result of a R2,2bn increase in imports of machinery and electrical
> appliances. On a cumulative basis from January to September the deficit
> stood at R62bn compared with R55bn in the same period last year. The fact
> that South Africa has become a net food importer for the first time ever
> is a further aggravating problem.
>
> It is hard to predict exactly what the short and medium-term global
> turbulence holds in store for our current account deficit. The rand is
> tending to depreciate against the dollar and euro and this will improve
> our export competitiveness – but the global downturn will lessen demand
> for our exports. The global downturn has brought the price of oil down to
> levels last seen two years ago, but this decline is partly off-set, in
> turn, by the declining value of the rand.
>
> In short, our current account deficit – which basically reflects on our
> failure to drive an aggressive industrial policy programme particularly in
> manufacturing and agriculture over the last 15-years – will remain a
> serious point of vulnerability.
>
> Myth number five: “our financial sector is healthy”
>
> Although our own financial institutions appear to be well regulated and
> have not been as severely exposed to toxic loans as their international
> counterparts, they have not been entirely immune either. Standard Bank has
> some exposure to derivative share-holdings, and Old Mutual lost over $1,4
> billion when its shares in Bear Sterns turned out to be almost worthless.
> Hopefully, these remain limited cases.
>
> But can we boast of a healthy financial sector when we have had one of the
> world’s worst housing price bubbles? When household debt has quadrupled to
> more than R1,1 trillion in the past five years? When more than 6 million
> South Africans can’t pay their debts? When, in the first quarter of 2008,
> South Africans spent 82,3% of their income servicing household debt,
> compared to 60,2% in 1998? And when 6000 vehicles and 2000 homes are now
> being repossessed every month?
>
> In assessing the health of our financial sector there is another reality
> that is often politely overlooked – the impact of narrow BEE deals. Many
> of these deals involved complicated financial gearing, in which an
> emerging elite (without capital savings) was provided with shares that
> they would, supposedly, repay out of the gains the shares would
> “inevitably” make. After all, “the stock market would always travel
> upwards” in the wonderful new SA and world in which we were now living.
> According to some sources, around 80% of these BEE deals are now “under
> the water”. BEE beneficiaries are unable to repay the debt on their
> shares – at least not within the prescribed time as agreed. This will
> impact upon the liquidity of firms, and it is debt that will, in many
> cases, also be passed into our banking sector. If this kind of BEE
> wheeling and dealing had had any serious transformational impact then, as
> a country, a deepening debt that will impact upon all of us might be
> excusable. But narrow BEE has been a deliberate side-tracking of serious
> transformation.
>
> Myth number six: “the choice is between no-change or imprudent
> macro-populism”
>
> We cannot be imprudent, but nor can we be complacent about where our
> economy is. We must reject the false choice of either an unsustainable
> welfarist “macro-populism”, on the one hand, or “no change”, where,
> supposedly, government continues to implement “prudent macro-economic
> policies”, while the markets do the rest.
>
> Our problems are structural. We have to transform the systemic features of
> our persisting growth path that is reproducing the crises of our society –
> unemployment, poverty, inequality, skills shortages, diminishing food
> security, excessive and unsustainable energy intensiveness, and current
> account vulnerabilities. These crises impact, in turn, on other major
> headaches, including crime levels and unsustainable household
> indebtedness.
>
> Too often the debate on economic policy is reduced to the wisdom or
> otherwise of inflation targeting or a small budget deficit. These are
> important issues that, no doubt, need prudent handling. But they are
> subsidiary matters.
>
> At the Alliance economic summit we agreed that our key priorities need to
> be job creation, major improvements in education, health-care and the
> criminal justice system, and serious rural transformation. These key
> priorities must not be handled as trickle-down welfarism, but as integral
> components of a state-led industrial programme that transforms our
> excessively commodity-based export-dependent and capital-goods
> import-dependent growth path. This is neither a dramatic abandonment of
> macro-economic prudence, nor is it a complacent sitting on our hands,
> hoping the markets will somehow solve everything.
>
> Myth number seven: “thank God”
>
> When South African financial institutions appear to be less vulnerable to
> the sub-prime crisis than institutions elsewhere, when things are not as
> bad as they might be, we are asked to believe that something miraculous
> has occurred. Consider a recent speech delivered at the University of
> Pretoria by Richemont and Remgro chairperson, Johann Rupert. He told his
> audience:
>
> “I am a proponent for the abolition of exchange controls but I must agree
> with finance minister Trevor Manuel that we were saved by foreign exchange
> controls. Certainly some of my banker friends and fund managers would also
> have been seduced by the higher yields available in the sub-prime and
> other markets. So for once, thank God for foreign exchange controls.”
> (Business Times, October 26, 2008)
>
> It is possible that we have benefited from divine favours in the recent
> past. It would be remiss not to acknowledge that cde Manuel has resisted
> the big-bang removal of exchange controls constantly advocated by the
> media’s “economic specialists”, by big business circles, and by the DA and
> IFP in parliament. However, in line with GEAR commitments to progressively
> remove exchange controls, the Minister of Finance has introduced no fewer
> than 26 relaxations of exchange controls over the past 8 years.
>
> The residual presence of some exchange controls in SA isn’t particularly
> due to divine intervention or to the Minister of Finance. Instead it has a
> great deal to do with protracted struggles from within the ANC, and
> especially from the SACP and COSATU in opposition to the hasty and
> excessive liberalisation measures that were introduced from the mid-1990s.
>
> In particular, the SACP-led Financial Sector Campaign eventually compelled
> hostile Treasury Department officials to deal legislatively and otherwise
> with our financial institutions and their unwise lending inclinations. The
> Credit Act and the extension of banking to a wider internal market were
> the results of the campaign.
>
> It is now conceded by many mainstream commentators that both these
> measures (along with exchange controls) have played a key role in
> protecting our banks from the global crisis. Thanking God is a way of
> obscuring the role of popular mobilisation in impacting positively on
> economic policy.
>
> Johann Rupert might not want us to remember this fact. But we should never
> forget. The transformation of our productive economy and broader society
> cannot depend upon a developmental state alone, it critically requires
> popular participation, popular mobilisation and popular monitoring and
> evaluation.
>
> NOTES
> [1] Cf. Marx: “The word over-production in itself leads to error. So long
> as the most urgent needs of a large part of society are not satisfied, or
> only the most urgent needs are satisfied, there can of course be
> absolutely no talk of an over-production of products – in the sense that
> the amount of products is excessive in relation to the need for them. On
> the contrary, it must be said that on the basis of capitalist production,
> there is constant under-production in this sense. The limits to production
> are set by the profit of the capitalist and in no way by the needs of the
> producers. But over-production of products and over-production of
> commodities are two entirely different things.” Marx, Theories of Surplus
> Value.
>
> [2] “Unemployment and the economic slowdown could cause massive social
> turmoil in China, a leading scholar in the Communist Party has said. ‘The
> redistribution of wealth through theft and robbery could dramatically
> increase and menaces to social stability will grow,’ Zhou Tianyong, a
> researcher at the Central Party School in Beijing, wrote in the China
> Economic Times. ‘This is extremely likely to create a reactive situation
> of mass-scale social turmoil,’ he wrote. His views do not reflect
> leadership policy but highlight worries in elite circles about the impact
> of the economic slowdown. Mr Zhou warned that the real rate of urban
> joblessness reached 12% this year and could reach 14% next year as the
> economy slows. China's annual GDP growth has already slowed to 9% in the
> third quarter, from 10.1% in the second. Some forecasters see growth
> slowing to 7.5% next year. The government has launched a stimulus package
> and cut interest rates to boost the economy. Last month, China's top
> planner warned that the economic slowdown in China could fuel social
> unrest. Zhang Ping, head of the National Development and Reform
> Commission, said the impact of the global crisis on China's economy was
> deepening. ‘Excessive bankruptcies and production cuts will lead to
> massive unemployment and stir social unrest,’ he said.”. (“China ‘faces
> mass social unrest’”, BBC News, 5 December 2008 – www//news.bbc.co.uk)
>
> [3] “The Unemployment Insurance Fund (UIF) is paying out about R300
> million a month to beneficiaries, up from R250m a month last July, and
> claim figures are expected to rise by at least 15 percent this year”.
> (“UIF payouts set to rise”, Business Report, Jan 21, 2009).
>
> [4] See Shawn Hattingh: “At present, there are four full member states of
> ALBA: Bolivia, Cuba, Nicaragua, and Venezuela. There are four observer
> states in ALBA -- Ecuador, Uruguay, the Dominican Republic, and St.
> Kitts -- who will become full members in the near future. ALBA rejects
> neo-liberalism and aims to forge a path away from "free" trade. ALBA
> itself has a wide range of guiding principles and has the following
> objectives:
>
> * To promote trade and investment between member governments, based on
> cooperation, and with the aim of improving people's lives, not making
> profits.
> * For member states to cooperate to provide free healthcare and free
> education to people across the ALBA states.
> * To integrate the ALBA member's energy sectors to meet people's needs.
> * To create alternative media to counterbalance the US and regional
> neo-liberal media and promote an indigenous Latin American identity.
> * To ensure land redistribution and food security within the member
> states.
> * To develop state-owned corporations.
> * To develop basic industries so that ALBA member states can become
> economically independent.
> * To promote workers' movements, student movements, and social movements.
> * To ensure that projects under ALBA are environmentally friendly”
>
> (ALBA: Creating a Regional Alternative to Neo-Liberalism?”, Feb.2008,
> www.monthlyreview.org/mrzine/hattingh070208
>
> ***
>
> Comments on
> “The current financial crisis and possibilities for the left”
> Paper by Jeremy Cronin, presented to the Chris Hani Institute’s Joe Slovo
> Memorial Lecture, 28 January 2009
> Comments by Patrick Bond, University of KwaZulu-Natal Centre for Civil
> Society (pbond@mail.ngo.za <mailto:pbond@mail.ngo.za>)
>
> This is a fantastic paper, one of the most coherent and visionary of texts
> I've read about the contemporary situation, showing full cognizance of the
> processes of capital accumulation, world system formation and ecological
> crisis, as well as mapping out some of the implications for South African
> Left praxis. However, in these brief comments, I hope to contribute to the
> debate in three ways. First, I do have some minor quibbles with comrade
> Jeremy's analysis; second, I'd like to forcefully agree and extend his
> description of foundational processes in crisis formation and
> displacement; and third, there are a few more substantial augmentations to
> suggest for prescriptions associated with South Africa’s independent left.
>
> This text (revised from a version in Umsebenzi last month) follows several
> from the SACP that appear to be ever stronger in their critiques of
> capitalism’s core processes, of which two are perhaps most important: the
> 1998 Alliance analysis of the economic crisis in which the deep theory of
> overaccumulation crisis was flagged; and the 2006 Bua Komunisi analysis of
> South African capitalism’s internal contradictions. In both, the
> disappointments for diverse independent leftists (of which I count myself
> a member) were largely in the programmatic arena. But this was prior to
> the Polokwane conference at which a few major initiatives of the left were
> announced as ANC policies, leaving those arguing for a socialist project
> within the Alliance with increased confidence. Such confidence, as Cronin
> says, is ebbing because of the drum-beat of fiscal discipline that has
> accompanied the crisis. In this context, let me begin by taking up just a
> few points in the text to cajole and to applaud:
>
> 1) What are we up against? Quibbles
>
> JC: "Once again, the inability to appreciate the dialectical character of
> world capitalism’s trajectory, was to lead Mbeki (like Seme before him) to
> gravely misread the global situation, to imagine an “African renaissance”
> based on catching-up and aligning ourselves to the “West”, with the
> promise of an ineluctable, evolutionary way forward – “today is better
> than yesterday, and tomorrow will be better than today.”"
>
> PB: I imagine the most hostile remark a Marxist given top marks at the
> Lenin Institute in Moscow could receive is "undialectical". I think
> there's something worse reflected in Mbeki's analysis though, especially
> in its full-on endorsement of technology-driven globalisation (of the sort
> that is found in such a banal form in NEPAD for instance, written in 2001,
> after the East Asian crisis and the quite Marxish 1998 pronouncements by
> the Alliance on that crisis). That is a return to modernisation theory as
> the basis for undergirding neoliberalism, as we saw in ASGISA, namely the
> sense that microfinance is the missing link, the energy that can bring
> "dead capital" to life in the De Soto sense. In a collection of political
> economic texts CCS produced last year, you can find David Masondo's tough
> critique of the revived modernisation strategy and my own attempt to
> unpack ASGISA's faith in finance. (A cheeky query: did the SACP fall for
> this in some sense, in the promotion of access to capitalist bank credit
> for a small sliver of the working class, instead of promoting the kind of
> bank nationalisation as a form of public utility, as some influential
> voices in the Western left such as Leo Panitch are now doing? The SACP's
> Financial Services Charter campaign work and Mzanzi bank account victories
> now deserve a fundamental rethink, with not only regulation but a much
> more profound attack on financialisation and consumer indebtedness now
> feasible.)
>
> JC: "To be sure, capitalism is seldom free of crisis."
>
> PB: Though the word ‘crisis’ is very common amongst South African
> activists (just check the names of numerous campaigns and organizations),
> there is a ‘chicken little’ critique leveled against classical Marxism for
> remarks of this sort (e.g. by Doug Henwood and Sam Gindin against yours
> truly). So I don't think this is an appropriate statement if we think of
> the word "crisis" in terms of a disruption to the reproduction of a social
> system (the way Robert Cox sometimes put it). In that sense, the
> self-correcting features of capitalism which could deal with the ordinary
> short business cycle run into much more serious problems when the longer
> K-cycles begin to have an impact. It is here we should reserve our use of
> the word "crisis", and acknowledge - as Cronin does - that periods like
> 1945-73 were not ones of "crisis" at the global scale. Once it destroys
> enough overaccumulated capital, the system can reassert the underlying
> dynamics of accumulation and fully "resolve" its crisis tendencies, we
> have learned again and again. Cronin is correct that we have not witnessed
> that process since the early 1970s, though with some $25 trillion in
> fictitious paper values now wiped off the world's balance sheet in recent
> months, at least it's possible to consider the financialisation
> displacements now impossible, so that the real work of restructuring
> underlying systems of industrial production may begin in earnest.
>
> JC: Crises in capitalism can occur as a consequence of factors extraneous
> to the accumulation process –wars, natural disasters, social upheavals.
>
> PB: Ah, but which of these is truly extraneous to capital accumulation?
> (Ok, many natural disasters like the 2004 Tsunami – but as Naomi Klein
> points out, ‘disaster capitalism’ is able to profit from such events, not
> just face destruction.) The challenge is to identify ways that the
> uneven/combined nature of the capitalist system pushes and pulls capital
> accumulation into different circuits and spaces of capital, a huge
> undertaking. (For this task, I especially recommend recent books by John
> Bellamy Foster and Fred Magdoff, David Harvey, Robert Brenner, Ellen
> Meiksins Wood and Joel Kovel, to name a few.) At that stage it should
> become possible to connect the dots, and show how WW1 and WW2 were
> geopolitical reactions to capitalist crisis, and how Katrina and Africa's
> worsening drought/flood cycle are internal (not exogenous) reflections of
> accumulation dynamics.
>
> JC: ... under capitalism “over-production” (i.e. more than the market
> demands – i.e. more than can profitably be sold) triggers a break-down in
> the system – a crisis of over-accumulation. This, in turn, requires a
> massive wave of destruction of productive capacity (in the form of
> retrenchments, factory closures, liquidations, and stock exchange
> collapses), in order to “clear the ground” for the next round of capital
> accumulation through growth. It must be stressed that under capitalism
> “over-production” is not the over-production of products that the mass of
> the world’s population often desperately needs. It is “over-production”
> relative to “market demand”, i.e relative to what can profitably be sold.
> Capitalism, for all its dynamism and robustness, is a profoundly
> irrational system.
>
> PB: Well said. The implications of this analysis go very far in taking us
> away from mere Keynesianism - the Northern elite's momentary current
> ideology of rhetorical preference (even if not yet the ideology of
> practice), though apparently not feasible in the South, if Trevor Manuel
> is to be believed. There is some discussion at the global scale - perhaps
> best articulated in the January 2009 issue of Development Dialogue journal
> issued by the Dag Hammarskjold Foundation - about "post-neoliberalism",
> but I don't see it yet, for the reasons that Cronin has specified. The
> deeper crisis of capitalism we face will require much more than what
> Walden Bello has over-generously labeled "Global Social Democracy" (I
> believe Bello incorrect in suggesting we have passed through the
> neoliberal stage - that extremist version of macro and micro economic
> policy will continue to return to haunt the world's poor and working
> people, and environment.) If we pose the problem in these deep-rooted ways
> (Cronin's description is excellent), then we see that the way out of
> overproduction is in the first instance deflection of the inevitable
> devalorisation of overaccumulation of capital (defensive maneuvres)
> combined with the socialisation of markets (our Left offense, as we have
> accomplished through brilliant social struggles with respect to
> anti-retroviral medicines in SA and to some extent water here in
> Johannesburg). This is the agenda of the SACP, reflected in the wonderful
> slogan "Socialism is the Future, Build it Today". But is that slogan truly
> informed by a deep-seated critique of capitalist market irrationalities?
> This is the opportunity to declare socialisation not only desireable in
> "the Future" but absolutely necessary "Today", because of capitalist
> crisis tendencies.
>
> JC: In SA the last decade of apartheid corresponded to a domestic
> downturn/recession and post-1994 we have seen a general economic upturn.
>
> PB: A quite complex process was underway from 1984-94 that no one has
> properly dissected, in my view (though Charles Meth made a good start in
> the early 1990s in his debates with the SA Regulation School, and Martin
> Legassick's excellent contemporary economic analysis has a fine historical
> sweep). There were far too many political interventions from above and
> below to characterise it as easily as does Cronin, especially given that
> from 1989-93 we witnessed the longest depression in SA's history. The
> factors we need to better incorporate and that cannot be summed up in a
> sentence would include:
>
> a) sustained overproduction especially for white consumer markets by the
> early 1970s;
>
> b) the range of labour-related rigidities and social irrationalities that
> SA capitalism suffered because of its apartheid shell;
>
> c) the desire of english-speaking capital (and the Ruperts too!) to escape
> SA, which they did through capital flight and overseas purchases until
> September 1985 when it became more difficult and expensive in part because
> of exchange controls and in part because of international opprobrium
> against SA capital; and certainly not least,
>
> d) resurgent class and community struggles from below.
>
> If these factors are at the core of our analysis, it becomes easier to see
> how an unsustainable accumulation process has occurred from 1999-present,
> based largely upon expansion of the credit system and
> momentarily-successful commodity exports which together began to generate
> the fabled 5% GDP growth rates of the 2000s. But at the same time, with
> this foundation, we can see how the underlying problems of the SA economic
> structure worsened throughout the period of "general economic upturn".
> Macroeconomic policies (as well as microdevelopmental strategies which
> emphasised markets) here were central, reflecting a power shift to capital
> ("the 1996 class project"). Another important factor in the recent
> "upturn" has been the bubbling of real estate prices, which from 1997-2004
> grew more than three times faster than the US, including in our own
> 'subprime' township markets. This in turn reflects an uncomfortable fact
> we cannot but mention in this room today: Joe Slovo's housing policies
> (designed by Billy Cobbett with important pressures from the old Urban
> Foundation and the World Bank) explicitly recommodified township housing
> ("normalisation of the markets" in the words of the 1994 Housing White
> Paper), so that the Kuznets real estate cycle went into hyperactive mode
> once the earlier round of housing devalorisation (1989-98) had played
> itself out.
>
> JC: [we are entering] a period of several years of downturn if not actual
> recession. We obviously make this point, in order to prepare our defences
> against what is likely to be a political discourse in the coming years –
> blame a largely “objectively” (and externally) determined downturn on
> “Polokwane populism”.
>
> PB: This is a point that needs to be defended in much greater detail,
> especially with the resurgent hype about Trevor Manuel's successes in
> macroeconomic management (in Financial Mail and M&G reviews of Pippa
> Green's new biography, but more generally).
>
> JC: MYTHS ABOUT THE SOUTH AFRICAN ECONOMY
>
> PB: I have a few more quibbles:
> * Myth one: Did "growth" really occur? If it had been measured correctly,
> in a way that calculates the depletion of natural resources, then no.
> Correcting SA GDP in this way, even the World Bank acknowledges that the
> economy - including its stock of nonrenewable natural assets (mainly
> minerals) - actually shrinks each year.
> * Myth two: the massive upturn in commodity prices from 2001-08 was not
> simply a missed opportunity, it is extraordinary how little the mining
> houses here reflected the huge profits on their books and in GDP
> contributions. This is probably a result of the way they were allowed to
> internationalise their operations starting with DeBeers in the early 1990s
> but accelerating with so many other offshore deals done since 1994.
> * Myth three: if we measure profits properly within economic fundamentals,
> we'd see a major increase in financial and decline in manufacturing
> activity, which is one of the most important problems in capitalism
> globally.
> * Myth four: on current account vulnerability, the crucial factor Cronin
> neglects is the outflow of capital to London thanks to the 1999-2001
> permissions that Manuel gave to Anglo, DeBeers, Old Mutual, SAB, Didata,
> Mondi and other corporations to externalise their financial headquarters.
> That is a critical area for reversal, via exchange controls.
> * Myth five: on the health of the financial sector, would this not be a
> good chance to ask auto-critically about SACP theory/practice in relation
> to access by the black working class to credit? What, indeed, is the basis
> for an appropriate system of capitalist credit flows to townships and
> rural areas, given that finance invariably amplifies uneven/combined
> development? Each circumstance is different, but some guidance on how we
> might turn the myth upside down by socialising finance would be welcome.
> * Myth six: why not embrace the choice: "between no-change or imprudent
> macro-populism", and then redefine macro-populism to incorporate the kinds
> of policies we want on the Left, and turn away from the Gono-style
> policies we don't? Why not take advantage of the way that the beastly
> Lawrence Summers now must confess "We are all Keynesians" and then
> establish the controls necessary to have a major upsurge of state spending
> without either inflationary damage to poor people's budgets and capital
> flight?
> * Myth seven: no quibbles here...
>
> 2) Uniting on analysis
>
> The words below are powerful and deserve amplification. I have no real
> quibbles, aside from desiring more detail about "combined and uneven
> development", that evocative phrase (of the unmentionable Leon Trotsky in
> his 1906 work on permanent revolution). This is for the simple reason that
> what David Harvey terms "accumulation by dispossession" - which in our SA
> phraseology corresponds to the "articulation of modes of production"
> (popularized by SACP theorist Harold Wolpe) in which capitalism
> superexploits precapitalist social relations - is an ever more important
> part of profitability, a factor not disturbed much by the current
> capitalist crisis (even if the commodity price collapse has slowed
> dispossession in some sites, like the Copperbelt, as Cronin observes). Our
> rereading of the works of Rosa Luxemburg is especially useful, as her SA
> and African analysis holds up well today (Jeff Guy pointed out in a CCS
> seminar in 2006), and the Luxemburgist analysis is also the best
> South-North rendition on the question of imperialism.
>
> JC: The present long-term cycle in the world capitalist system began in
> 1945, with the upswing reaching a turning point around 1970/3. Since then,
> globally, we have been in a long downturn – somewhat longer than normal,
> partly because capitalist-aligned economists and central banks and
> multi-lateral institutions (like the IMF), believing that they had finally
> “beaten” recession forever, introduced a range of interventions which we
> can now see have simply temporarily displaced the epicentre of crisis into
> semi-peripheral regions, thus delaying and deepening the full-blown crisis
> in whose midst we now are... while many leading politicians in capitalist
> countries are beginning to express grave concern about the future of our
> planet – denialism; or market mysticism (somehow the hidden hand of the
> market will find a solution); or a cynical, even genocidal, social
> Darwinism (“don’t worry there will be losers but there will also be
> winners”); or hopelessly inadequate piecemeal reforms remain the order of
> the day... The geographical shift in hegemony. Marx, Lenin and others
> following them have demonstrated how capitalist development is
> characterised by high degrees of combined and uneven development. It is a
> global system characterised by geographical zones of various importance
> within the accumulation process – core zones, semi-peripheral zones, and
> marginal or peripheral zones. Within this hierarchical system there is a
> tendency for a single zone/region or country to emerge as the dominant
> hegemon... it is the people of the South who will bear the burden of the
> crisis. For instance, as the core capitalist economies focus on their own
> crises and their own stimulus packages, already paltry development aid is
> diminishing; trade protective barriers are going up; FDI is pulling out of
> much of the South; premiums on international loans have increased; and
> portfolio investments are even more disinclined to bet on the South.
>
> 3) South African challenges
>
> PB: I think Cronin misses two essential challenges for the SA left:
> withstanding the particular pressures of the Bretton Woods Institutions,
> now resurgent with ‘Washington Consensus’ logic thanks to their
> relegitimation in South Africa (a R50 billion Eskom loan for coal-fired
> power plants) and probably globally in coming weeks thanks to Barack
> Obama; and the inability of SA’s neoliberal bloc to change world
> conditions (as witnessed today in Davos where president Kgalema Motlanthe
> and Trevor Manuel will again exert zero pressure for genuine global
> financial governance, in the wake of their apathetic role in the G20 in
> Washington). The first pressure was felt on October 22, when hundreds of
> pages of IMF reports were dumped on South Africa, overwhelming our
> slovenly business press corps. The five key points made in the most
> important report, the Article 4 Consultation, are:
>
> * The SA government should run a budget surplus
> * SA government should adopt privatisation for "infrastructure and
> social needs" including electricity and transport
> * SA Reserve Bank should maintain existing inflation-targeting and raise
> interest rates
> * SA Treasury and Trade Ministry should remove protections against
> international economic volatility, especially financial and trade rules
> * SA Labour Ministry should remove worker rights in labour markets,
> including "backward-looking wage indexation" to protect against inflation
>
> Reports from Davos today already mirror the sense we have from the
> November meeting of the G20 (the major financial economies): SA will play
> deaf and dumb to the needs of Africa, for massive debt cancellation,
> reparations and an end to capital flight. Those needs cannot be doubted,
> yet the only real pressure SA is known for applying is to extend African
> membership on the boards of the Bretton Woods Institutions. This has been
> an extremely difficult job, even though the IMF and Bank desperately
> relegitimation, and the main question to be asked is, “so what if Africa
> gets another seat or two?” (Especially if the likes of Manuel and his
> allies across Africa determine the agenda.)
>
> In contrast, showing genuine Third World financial leadership, the
> Ecuadoran government recently led the world with a debt default based on
> the premise of Odious Debt (SA remains in conflict with Jubilee SA and
> Khulumani over precisely the same principle in the US apartheid
> reparations lawsuits). And the Venezuelan government has called for the
> closure of the IMF (as did Joseph Stiglitz in 2002) and has catalysed a
> Bank of the South to operate outside the logic of “sound banking
> principles” (meanwhile in mid-January, Manuel agreed on a 17.5% ownership
> in a $25 billion “African Investment Bank” destined to run precisely on
> “sound banking principles”, according to the founding documents). Our
> economy lost $6 billion when the currency crashed in October 2008 after
> Mbeki’s office released Manuel’s resignation letter, so once again SA’s
> vulnerability to world finance – and so far untried ability to reverse
> this through tightened exchange controls – was revealed as a huge
> challenge, which the left has not really joined so far. In other
> countries, excellent protests have been recorded against the neoliberal
> project that has intensified because of the world financial crisis (most
> recently in Iceland of all places), while South Africans retain what I
> believe to be the world’s highest protest rate per capita (far higher than
> China’s) yet have not connected the dots between their micro problems and
> the ongoing influence of IMF logic. Booting out the IMF consultants who
> make Article 4 recommendations in direct contradiction to what their boss,
> Dominique Strauss-Kahn, has been saying (he advocates a 2% increase in
> deficit spending ‘everywhere’), would be a good first step.
>
> JC: [critique of Moleketi] Typical of this line of reasoning is a
> caricature of what we are actually attempting (supposedly “a total
> U-turn”). What we are arguing for is exaggerated, the better to be able
> to demonstrate our “lack of wisdom”.
>
> PB: But why NOT a total U-turn? Why not the demands of Keynesianism as
> against neoliberalism and monetarism? Why not a (non-subimperialist)
> African continental orientation and major inward push to change wealth and
> income relationships so as to revive markets for basic-need goods and
> services? Why not a full U-turn on the kinds of international relations -
> free trade, repayment of apartheid debt, inviting TNC direct investment -
> that made SA so vulnerable over the years? Why not a U-turn on
> unemployment and inequality, and on reliance upon the market in so many
> ways?
>
> JC: We have to be realistic about these and other related challenges. But
> what we absolutely must not allow this time around is that the “but is it
> affordable?” refrain should be used to deflect us off our strategic and
> programmatic DIRECTION.
>
> PB: Affordability is a factor in the ideological debates with Treasury and
> the bourgeois press. But I think it will be in the micro interventions -
> of which probably the National Health Insurance proposal will be most
> contested - that the Left must firm up its critique of market processes
> and outcomes. On anti-retroviral medicines and water, we have come a very
> long way from a decade ago, when insisting upon locally-produced,
> decommodified AIDS drugs and Free Basic Water supplied by a municipality
> (not a Paris company) were sacrilege.
>
> JC: ... it is decent work and sustainable livelihoods (and not 6% growth,
> or some other arbitrary figure) that will be the key indicator of progress
> or otherwise. This, in turn, will require the marshalling of our resources
> around a state-led industrial policy that prioritises the transformation
> of our productive economy.
>
> PB: All of these strategies are excellent as transitional demands but hang
> on, there are just as rich a set of economic strategies emanating from the
> radical social movements and labour that deserve building upon, in
> addition to the AIDS medicines and deprivatised water that the Treatment
> Action Campaign and Anti-Privatisation Forum have won. What about land?
> Housing? Free education? Larger quantities of free municipal services with
> greater local and national cross-subsidies? A Basic Income Grant? Radical
> changes to the SA state's pro-corporate environmental policies on
> biofuels, biopiracy, timber, fishing and especially climate? And
> reparations for apartheid debt? These are all the actually existing
> campaigns by social movements, churches and labour which we need to
> promote and support where appropriate. The Party has been weak in its
> acknowledgement much less solidarity with these campaigns (and vice
> versa), so let's figure out ways to reverse our lack of unity in the
> crucial period ahead.
> In addition, we need to always get back to a Left programmatic synthesis
> and, of course, to analysis. With the SACP and Diakonia, our Centre is now
> discussing how to generate a reading circle beginning next month, to
> tackle Das Kapital, Luxemburg's Accumulation of Capital and contemporary
> texts. I will propose to the broad church of comrades from the Party, the
> liberation wing of the faith/justice movement and our independent left
> community and intellectual stalwarts who take part, that this text of
> comrade Jeremy is our first read. Thanks very much for it, and for the
> chance to comment on it with the full respect it deserves.
>

_______________________________________________
ope mailing list
ope@lists.csuchico.edu
https://lists.csuchico.edu/mailman/listinfo/ope
Received on Wed Jan 28 12:21:50 2009