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Jacob Zuma meets global capitalism – and the outcome cannot be good


Ismail Lagardien is a writer, columnist and political economist with extensive exposure and experience in global political economic affairs. He was educated at the London School of Economics, and holds a PhD in International Political Economy.

Since 2009, South Africa has been governed by a group of people, most of whom had no idea what they were doing, and who simply shimmied into the slipstream of global capitalist orthodoxy. Then they got burnt by the sum of their own lack of understanding of just how brutal and unrelenting forces in the global political economy can be.

President Jacob Zuma is not a happy man. He has just been introduced to the cruellest realities of early 21st century global capitalism, and looks like a spent force; a withered revolutionary who has missed the past 25 years of changes in the world. While he has been shown-up as being quite crude, intellectually, and unsophisticated in the past, the ill-conceived removal of two finance ministers in that fateful week in December, and the fall-out over the past couple of months have been quite revelatory. President Zuma cannot, possibly, be a happy man.

These are harsh claims, but the evidence is quite clear. Between the Nene-Van-Rooyen-Gordhan debacle, and last week’s SONA, Zuma has had all his toys taken from him, and has been sent to his room – in a manner of speaking. Suddenly his pompousness and his horripilating laughter, chortling and guffawing have disappeared from his repertoire. Zuma, actually, looks like a spent force, and a bitter man. Under his stewardship, the ANC has, in the past few weeks, looked like a deer caught in the headlights of capitalist reality. They have been awakened from their slumber and the muddling-through of the past few years, and are, now, having decisions made for them – which cannot be good for the country. Especially not if the ANC snaps back like a wounded animal.

If former President Thabo Mbeki was aloof, a view which I do not necessarily share, Jacob Zuma is like an outdated electrical device that has no better use than as a door-stop, or to prop up a wobbly table. I do not share the view that because he has very little formal education he is unfit for office. At the best of times, formal education is necessary, but insufficient. I also cannot get myself to believe that he does not read. I have not seen his bookshelf, nor his night stand. I do know, with certainty, though, that Cabinet memos, briefings and related documents are circulated almost every day, and that no president signs off on every document placed before them, without at least reading (some of) them.

What I will say, though, is that events of the past two months have confirmed that Zuma has a very crude, unsophisticated, and bloody outdated view of political economy. If ever there was evidence of his understanding of 21st century global political economy, it was the speech he gave to a group of business people on 9 December 2015. The speech was a mangle of otherwise good concepts, ideas, perceptions, interpretations and assertions, and tortured facts that seem to have been drawn from the diary of a 1960s revolutionary that had been destroyed in a flood, with bits and pieces of words barely legible – some pages were stuck together, others were missing – and which the President hastily re-arranged into his own magnum opus on Africa in the global political economy. Reading the transcript of the speech is even more painful than watching it on YouTube. There were moments, during that speech, when Zuma sounded like Julius Malema, especially his crude references to securing economic freedom.

Since then, however, Zuma has received a crash course in the inseparability of politics and economics, beyond pat phrases like “political economy”. He has been reminded, painfully, about how market forces, amorphous as they may be, respond to the things that politicians say and do. I should hastily add that the idea of market forces as amorphous is a reference to the millions of person-to-person transactions that span the globe, which makes it difficult to point to anything, other than people trading goods and services, as the real market. This is one dimension of how global capitalism actually works.

There are real people who listen to what Zuma says, who pay attention to what he and the government do, and make vital and potentially damaging decisions about South Africa’s current and future market relations. It is not always (if it ever is) a completely automatic, technical process disconnected from human perception, knowledge or emotion. It is, also, not as if this market is completely autonomous and independent – forget what the textbooks tell us.

David Ruccio, professor Economics at Notre Dame University, summed it up rather well, when he said: “Most of us have little understanding of what makes equity markets move in one direction or another. A long time ago, one of my professors explained to me: ‘It’s five percent fundamentals; the rest is determined by however big investors feel when they wake up in the morning’.”

There is nothing conspiratorial about this, as some ANC leaders may think. It is part of how global capitalism works. Of course, if you are bent on destroying the capitalist system, and consider capital to be conspiring against the ANC’s revolutionary impulse, or withdrawing South Africa from the global political economy, then you might ignore these matters and resist any pressure or influence from investors. But, South Africa purposefully sought to integrate into the global political economy after 1994, carried itself with pride and promise until about 2009 (there were very bright people who worked hard to stabilise things at home, and who tried to change things from within the institutions of global capitalist governance) and then the government fell into a funk.

Since then, the country has been governed by a group of people, most of whom have no idea what they are doing, and who simply shimmied into the slipstream of global capitalist orthodoxy. Then they got burnt by the sum of their own lack of understanding of just how brutal and unrelenting forces in the global political economy can be. Zuma and his followers sought power, and when they had it, they went about it like a bunch of children whose parents were out of town for a weekend, and indulged in every illicit thing available. Power had become an end in itself.

However, over the past few weeks, Zuma learned, the hard way, how markets are structured by powerful governments, and how the rich tend to use their control of government to structure market in ways to make themselves richer. We should make no bones about it; the downgrades by Standard & Poor’s, Moody’s, and the Fitch Group, are not technical processes that occur without any human intervention. We can take a lead from the brilliant Polish economist, Michal Kalecki, who may have written that, in the global political economy of the early 21st century, business leaders look upon “every widening of state activity” with suspicion, and expansion of the government wage bill makes opposition to the state “particularly intense”. When confidence (in the state) deteriorates “private investment declines, which results in a fall of output and employment … [and] This gives the capitalists a powerful indirect control over government policy: everything which may shake the state of confidence must be carefully avoided because it would cause an economic crisis.”

To paraphrase a wise person I know, probably out of context: It cannot be correct that there is an outside hand (and not the ruling party) that tells a democratic government what to do, and how to govern. It is possible for autocrats to rule, but not for democrats to govern without the vital ingredient of trust. Zuma has lost the trust of the population and, evidence suggests, of his own party. All because he allowed confidence in the state to fall, which has given too many external forces indirect control over government policy. Is this a good or bad thing? It is too soon to tell, as Chairman Mao was reported to have said about the French Revolution. The only thing that seems clear is that Zuma is not a happy man, and the country is not happy with him. All of this is nought for our comfort. DM


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