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Socialists, bless ’em, visit Cape Town

Ivo Vegter is a columnist and the author of Extreme Environment, a book on environmental exaggeration and how it harms emerging economies. He writes on this and many other matters, from the perspective of individual liberty and free markets.

A week after Gwede Mantashe, the ANC’s secretary general, railed against BEE firms that overcharge the government for inferior products, he welcomed the Socialist International Congress to South Africa. Therein lies a sweeping contradiction.

What is socialism? Ask the question a dozen times, and you’ll likely get a dozen answers, at least one of which will be “stupidity”. Presumably, that is not the definition the ANC leadership had in mind when it welcomed Socialist International to our shores for a Congress. 

Gwede Mantashe, secretary general of the ANC, told the SABC, “The ANC correctly became part of the progressive forces that fought against colonialism, racism, poverty, patriarchy and other social ills. Hence, the ANC is a member of the Socialist International because we believe that it is one of the formations to pursue the ideals that the ANC stands for.” 

President Jacob Zuma, in closing the proceedings last week, added: “The voice of the Socialist International must be heard today more than any other time before, particularly, because of the challenges that face the world today – on matters of governance, on matters of rights of people, on matters of democracy, on matters of economic development and indeed on matters of poverty, inequality and unemployment that face the world.”

What are these ideals, then?

Socialist International was formed in 1951, but as its name implies, its roots encompass the full gamut of socialist and communist history. The ANC is the only South African party which is a full member, one of 108 such members. Of these, 61% are not in government in any way, although 18% unfortunately rule outright.

The form of socialism that most resembles the way the ANC governs is state-oriented market socialism, in which state-owned enterprises play a dominant role and the “social dividend” is meant to pay for services delivered by the state. Notably, about a third of South Africa’s GDP is channelled through government tenders.

And this is where Mantashe runs into a contradiction. He recently spoke out against a culture of overcharging and underperforming on the part of those who do business with the government, saying “black business must deliver”. Although he meant to single out companies that take advantage of their black economic empowerment (BEE) status to rip off the taxpayer – billing R30 for a loaf of bread, for example, R500 for a broom or R20-million for a school worth no more than R10-million – they aren’t the only companies that do this. It happens all the time with state expenditure by way of tenders. Government contracts, whether issued to preferential bidders or not, suffer the same problems around the world.

With the best will in the world, there simply is no way to plan and manage a large share of a country’s economy without a tremendous amount of wastage and inefficiency on the part of the government, and private opportunism and profiteering on the part of what we in South Africa call “tenderpreneurs”.

Preferential treatment for some businesses over others merely makes the problem worse. In fact, absent great benefits, such preferential contracts are unjustifiable, and Mantashe correctly points out the costs of black economic empowerment while the marginal benefit of each new empowerment deal becomes less clear with every passing year. Increasingly, it is becoming a programme to distribute the “social dividend” via government tenders to favoured members of society. This is the epitome of state-directed market socialism and the reason why it always ends up doing very little for the people as a whole.

For all the cosying up to Socialist International, the ANC itself has always denied that the Freedom Charter that embodies its values is inherently socialist.

In that famous 1955 document, under the heading, “The People Shall Share in the Country’s Wealth”, you’ll find this clause: “The national wealth of our country, the heritage of all South Africans, shall be restored to the people. The mineral wealth beneath the soil, the banks and monopoly industry shall be transferred to the ownership of the people as a whole. All other industry and trade shall be controlled to assist the well-being of the people.”

Some have viewed this as a call to socialism or nationalisation, and while the ANC once did assert the need for nationalisation – as some members still do – the socialism charge is less clear-cut. 

An unsigned article in the ANC-aligned, left-wing newspaper New Age, dated 17 November 1957 and preserved for posterity on the ANC website, discussed this clause. “Whatever one’s views might be as to the desirability of establishing a socialist system in South Africa,” it said, “the immediate aim of the liberatory movement is not and cannot be the establishment of socialism.”

It discussed the unjust concentration of wealth in the hands of whites, which requires correction to end inequality imposed by past policies of unjust discrimination. It is hard to dispute this view, and the need for historical redress after the fall of Apartheid was accepted by all parties at the negotiating table. The programme of black economic empowerment was one of the measures established to achieve exactly that.

The essay in New Age went on to distinguish explicitly between socialism and nationalisation, saying, “Socialism and the nationalisation of the basic wealth of a country are not synonymous terms.” It also pointed out that a degree of nationalisation does not imply the abolition of private enterprise, nor that all industry must come to belong to the state. 

Unfortunately, it does not go further, to question the nature of nationalisation itself, and what it truly means to restore South Africa’s wealth to the people. 

There is no reason to believe this can only be achieved by vesting ownership of key economic sectors in the hands of the state. Selling off the government’s vast holdings in land, the energy sector, transport infrastructure and mining, and presenting the people who were disadvantaged in the past with an ownership stake in these assets would equally achieve the aims of the Freedom Charter, and do a whole lot more to combat poverty and create productive capital.

Having denied that socialism was the aim of the liberation struggle, the claim of solidarity with Socialist International becomes questionable. Sure, the forces of socialism and communism supported the ANC’s liberation struggle, but only inasmuch it furthered their own Cold War struggle against the capitalist status quo. Even if South Africa owes its liberation in part to socialists, the belief that we now owe it to them to pursue socialist values is absurd.

Why, indeed, would socialism have an exclusive claim upon fighting against “colonialism, racism, poverty, patriarchy and other social ills”? 

Free-market capitalism – which should be distinguished from the mercantilism and state corporatism of the colonial era – explicitly opposes the unequal power relations inherent in patriarchy, racism and colonialism. Economic freedom has a splendid record at raising prosperity and reducing poverty. By contrast, socialism has a poor record, full of tyranny, deprivation and heavy tomes of dark, depressing prose.

Mantashe and Zuma can’t have it both ways. If they want to align themselves with socialism and state-directed growth, then they should expect corruption and wastage. If they feel that those who do business with the state, especially under preferential conditions such as black economic empowerment, fail to deliver what the people need and seek only self-enrichment, they should abandon the economic model that encourages this. They should advocate instead a model that seeks out and eliminates wastage and inefficiency; an economic system in which profits accrue to those who best meet the needs and wants of customers, rather than to those who best manipulate the levers of bureaucratic power.

You can’t preach solidarity with the forces of international socialism and then complain when politically-connected opportunists take advantage of your naïveté. DM


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