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Analysis: Who are these capitalists and what have they...

Business Maverick

Business Maverick, Politics

Analysis: Who are these capitalists and what have they done with the ANC?

The ANC’s discussion paper on “economic transformation” sounds surprisingly capitalist – both at face-value and reading between the lines. Hard-core socialists and the pro-nationalisation lobbies are not going to be dancing with joy.

If you’re a capitalist, every time you sit down to read an ANC discussion document on the economy, you might want to brace yourself with care. A glass of single malt to calm you down, a comfy chair in case you read something particularly shocking and your knees get weak, or even a copy of The Economist just to remind you that you are not alone in your beliefs.

Well, the only person who might feel a bit woozy after reading the ANC’s national general council discussion document on economic transformation is Panjo, the walk-about tiger of Delmas’s, young mate. Because there’s very little “transformation” in it. There are a few hints, but nothing to shock. In fact, apart from one or two lines, you’d be hard-pressed to know this came from the Luthuli House. Never mind that this is a party in alliance with the South African Communist Party.

There is a curious duality, an ambiguity to the whole thing. Take this paragraph: “For a capitalist economy to succeed, the state has to keep business sufficiently profitable. It should act to raise costs for business only where required by the imperative of achieving a more inclusive and equitable economy. We can no longer afford to let individuals, departments or agencies raise the cost of doing business in line with their own priorities or through poorly thought-out measures at the expense of national needs and aims.”

On first reading it seems to be an admission that business is too often stopped from creating economic wealth and creating jobs by misguided policies. It could be taken straight from the DA’s policy documents. Or, it could be saying that actually, we need to think more carefully about how to get business to create the kind of society we want, and then we need to make a really big policy change. And then we’ll come down on big business like a ton of bricks.

But to us, it looks like a small admission, by what is essentially a socialist party, that it is private companies that create wealth, that to do that you have to create the environment for people to take risks with their money, and that through your process you create “decent work” – the item that was first on the ANC’s election manifesto.

Our view is strengthened by this paragraph: “The state must respond more effectively to factors that impose unnecessary costs on business and the economy, notably around the value of the rand, the quality and cost of infrastructure, skills bottlenecks and the regulatory framework.”

Surely these are the comments of someone not entirely opposed to capitalist enterprises.

The document certainly gives a few nods towards the more populist end of the economic policy spectrum. For example, it suggests you could “Encourage more equitable income distribution overall, including by limiting executive incomes and the conspicuous consumption of luxuries.” Then later it suggests, “Discouraging conspicuous consumption by the rich through taxes on luxuries such as high-powered cars and homes as well as consistent messaging(sic) and leadership by example by the government and the alliance.”

You might want to buy that Lamborghini, sort out the pay options and make sure it can’t be taxed now. We don’t expect a super-tax anytime soon, but watch this part of the debate closely. And we really have to ask whether the young lion’s Mercedes C63 comes under the definition of “high-powered”. And whether BMWs used by ministers will get an exemption. This may also be the first time the DA has had an impact on ANC policy; it was the opposition party’s series of Parliamentary questions that led to the whole issue of ministerial cars blowing up as it did.

There are one or two hard-and-fast suggestions for changing the complexion of the upper echelons of our society. There’s the idea of making Model C schools take more children from homes that can’t afford school fees and making merit part of their entrance requirements. It’s something that should be discussed, there may well be the germ of a very good idea in there somewhere.

But what struck us as particularly intriguing were the short summaries on the two big economic arguments of our time; inflation targeting and the level of the rand. They are both concise, neutral and accurate. There is no hint of any bias. And that’s odd because, particularly with inflation targeting, there’s a massive argument within the alliance about all this. You might have thought there would be a bit more, a hint of some direction, a way forward for discussion. Reading this, you get the impression inflation targeting in particular may be here to stay. Cosatu won’t be pleased.

But Zwelinzima Vavi’s ire will be nothing compared to the whimper of defeat that Julius Malema must have emitted upon reading this. Because the bit on the nationalisation of mines is not even given its own heading, it’s contained in a segment on “The Balance of Power and Ownership”.

“Any effort to bring about a more equitable economy affects, but must also operate within, the balance of power in the economy. That means that there will be lobbying and push back from existing centres of power as well as the potential beneficiaries of alternative policies. More radical proposals inevitably bring greater risks, specifically around capital flight, loss of skills and destabilisation of production structures. We need to assess these costs against the promised gains. A particular problem is that business typically exaggerates the potential risks and costs, while proponents invariably ignore or downplay them.”

We cannot think of a more neutral way of putting it. It’s basically saying that some people will benefit from nationalisation, and some will not. It doesn’t even give away whether the proposed nationalisation of the mines is about putting money in the hands of the people, or just a ploy to buy more cigars for the already rich and politically connected. But it seems to hint, just perhaps, that this is not an argument about helping the poor.

It goes a bit further, and it gets worse for Julius. The next paragraph refers to the Zambian example of what happened when copper mines there were nationalised. And it’s not pretty, it explains how government was forced to entice companies back, and about what a mess it all was.

And that’s all it says about nationalisation and mining. A 19-page document, and this issue gets about three paragraphs. One doesn’t get the feeling that this is going to be the big deal for the NGC this year. (Of course, they will need to clear their schedule for the more urgent task of media-bashing – Ed) There’s also an indication of how un-socialist the ANC seems to be these days. Hell, we searched the entire paper and can’t find the words “lumpen” and “proletariat” anywhere. We miss them. However, don’t forget that parts of this document are ambiguous, their meaning will depend on who’s reading them. Which kind of mirrors the party’s leadership now, doesn’t it?

By Stephen Grootes

(Grootes is an Eyewitness News reporter)

Photo: A mine worker is seen underground in South Deep mine outside Johannesburg June 4,2010. REUTERS/Siphiwe Sibeko


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