By NIALL REDDY*
Left critics often cast South Africa’s ruling African National Congress (ANC) as an organization under the thrall of a homogenous elite, wedded to neoliberalism and the old economic structure. Recent events have blown this interpretation open. The ANC elite is in fact sharply divided, and one faction seems largely impervious to corporate South Africa’s immense economic power.
A better understanding of the ANC’s incumbency can be gleaned from political scientist Roger Southall’s notion of a “party-state” which pinpoints how the ANC’s tenure in government has transformed it into a sort of machine through which different class forces and interest groups attempt to secure access to public sector jobs, contracts and other resources.
The party-state has empowered a ‘state elite’ who occupy cabinet positions and directorships in SOEs (State-Owned Enterprises, like ESKOM, Transnet, Denel and PetroSA), but it also been the vehicle for a much wider process of class formation, argues South in his book, “Liberation Movements in Power” (now also available in paperback). Equity stipulations adopted by the public sector and the ANC’s fulsome embrace of political rather than merit-based appointment have turned it into the primary site for the creation of a new black middle class.
Two other groups have gained most from the ANC’s time in government. The first Southall terms the “corporate black bourgeoisie”–black businesspeople who succeeded in penetrating the boardrooms and share structures of corporate South Africa, many rising up in the initial waves of Black Economic Empowerment (BEE) in which white business energetically sought to recruit political allies.
The second are a more diffuse class of capitalists who don’t enjoy such strong connections with the corporate economy. They are reliant instead on the ever burgeoning procurement spend of the state, which now comprises 42% of the total public budget ($372,9 billion) according to one report.
The current conflict is defined by the principal opposition of these two groups, with the rest of the party-state aligning according to different interests, ideologies and contingencies. The faction formed around current President Jacob Zuma is stronger in the provinces, where former Bantustan administrations that were sequestered into the new state have continued uninterrupted traditions of clientelism and cronyism.
But Zuma also draws wide support from individuals defending little fiefs of patronage throughout the party-state as well as middle class elements that are most alienated from the white dominated corporate sector and receptive to radical transformation.
The biggest drawcard for the camp of Zuma’s main rival, his deputy Cyril Ramaphosa, meanwhile is a generalized fear of electoral defeat which would jeopardize the viability of the party-state altogether. This is most felt in areas where patronage politics is less ingrained, although even the Zuma faction is not immune – witness the recent vacillation and possible defection of David Mabuza, premier of Mpumalanga province and formerly a key backer of the president.
Ramaphosa’s main support is rooted in regions of the party-state that have preserved credible institutions and elements of the Alliance where at least a measure of grassroots pressure is still felt, but he is also joined by individuals motivated by principle and wanting to arrest the decline of a once-proud organization.
Debating Anti-Corruption Politics
Two positions on how civil society and the left should engage these developments, and the wider crisis of state capture, have dominated. One argues that working people simply have no dog in inter-elite conflicts: we lose with whichever faction is in power, so we’re better off not getting involved at all.
A second sees the fight against corruption as preeminent, and urges us to forge as broad a coalition as possible by suppressing our separate demands: making the fight solely about corruption and nothing else.
The veteran activist Zackie Achmat, on behalf of the #UniteBehind campaign, has defined a different, and I think more sensible approach. He acknowledges that different elites stand to win whichever way the conflict pans out, but doesn’t view the result as neutral for workers. Among other things, the Zuma faction is the far greater threat to democracy, and its perseverance promises a renewed slide towards the securitization of politics and abuse of the judicial independence.
Achmat is right – if the Zuma and the Guptas are unimpeded, the political environment will become much more hostile to efforts to build countervailing power against whichever faction of the elite happens to hold sway.
However, I think #UniteBehind was mistaken to have given the main platform to former Deputy Finance Minister, Mcebisi Jonas, at its march Monday ahead of the no-confidence vote in Parliament today. The left should work with all who oppose state capture, but we urgently need to imprint our own politics on the movement – we can’t afford to allow corporate South Africa and its allies to continue to pose as the main enemies of corruption.
The policies pursued by the National Treasury and strongly supported by large-scale capital haven’t just been bad for working people because they destroy jobs and lower wages. They also produce the conditions in which patronage has taken root.
Patronage and Transformation
The party-state thesis encourages us to see the ANC and its 1,2 million members not as a narrow organization welded to one or another ideology, but as a larger social field shaped by the cleavages of a post-colonial society.
We need to emphasize this: cronyism and parasitism haven’t beset the ANC simply as a corollary of its own arrogance or through the influence of one or many nefarious individuals. They are intimately a product of the social landscape in which the party is embedded, and have festered most where the wounds of colonialism and its successors are deepest.
When the formal economy has most failed to create avenues for social mobility, the demands on the party-state—and the returns to patronage—have been greatest. This is so in areas left largely untouched by the corporate sector: destitute rural communities and townships where an incredible scarcity of employment intensifies the pressure on public functionaries to distribute jobs and resources to personal networks, greatly enriching those willing to do so.
It’s so in areas where the corporate economy is very much present, yet closed to new entrants. When black professionals experience an inability to advance because of a hostile corporate culture, because of old-boy networks, or simply because of a lack of new openings, they harden their attachment to the party-state. They become more sympathetic to any project that widens the domain of the state or directs its resources more forcefully to enrichment.
More widely, when new entrepreneurs experience an inability to grow because of entrenched monopolies or a poor economic outlook, they are more likely to pursue expansion through tenders and to invest in political relationships rather than innovation. They are more likely to excuse corruption as “transformation” and less likely to share large-scale capital’s concern with delimiting the authority of the state and guarding the independence of its institutions.
Patronage, in other words, flourishes where transformation flounders.
Conversely of course, new middle and upper classes are more likely to espouse capitalism’s supposed affinity for Weberian bureaucracy and state neutrality when they have a greater stake in the formal economy. When the corporate sector is not a world closed to them, when they share in its wealth and gain from its growth, they will root for a state that husbands enterprise and defends itself from takeover by sectional interests.
White capitalists understood this on some level – that’s why they worked so quickly to inculcate a network of political allies through share transfers as democracy was dawning. Ultimately this was an elitist strategy designed to forestall real transformation rather than further it.
It was transformation on the cheap. New black capitalists grew fabulously wealthy but remained few in number. Many slipped the leash somewhat by pushing for a slightly more assertive BEE policy, but ultimately they acted faithfully to defend big businesses’ core concern of keeping capital mobile and state regulation and spending confined.
The Treasury provided the greatest service to capital’s ability to resist transformation by exposing South Africa to the full discipline of financial markets. So whenever the transformation agenda threatened to escape the bounds of a gradualist and market driven framework, capital responded vociferously – like in 2002 when R2 billion was wiped off mining shares following the leak of a draft charter on mining transformation.
The Rise of the Patronage Faction
As Southall’s extensive scholarship shows, for all its various amendments, BEE has been tethered to the pace of the market. It spurts when asset markets and growth go up and reverses when they come down.
Thus the stock market boom of the late 1990s created the first tranche of black millionaires, then subsequently wiped many of them out when the East Asian crisis triggered a collapse. Most indexes of transformation floundered for several years after, but then lit up as SA experienced its only brief phase of high growth on the back of the global headwinds that ultimately ended in the 2008 crash.
The data on transformation since then is scandalous and under remarked in public debates. The one figure which has received wide circulation is share ownership, which the Johannesburg Stock Exchange (JSE) puts around 17% and Zuma puts around 3%, with the difference largely made up of indirect share ownership through pension funds.
Data from a black empowerment consultancy shows that black directorships on the JSE grew by 48% between 2006 and 2008 from 485 to 714 during BEE’s short bull phase. Between 2009 and 2012 they grew by less than 10%. In the four following years, according to the consultancy Who Owns Whom, there was virtually zero net growth in number of black directorships on the JSE – which numbered only 1043 in 2016 (the number of actual individuals who hold directorships is smaller since many hold more than one). Only around 15% of these directors have held executive positions in any given year.
The Commission for Employment Equity’s 2008 report found that non-white South Africans comprised only 23,3% of top management positions in the private sector (blacks made up 12,5%). In 2016 non-whites comprised 24,4% (with the black share shrinking to 10,7%).
There has been, in other words, virtually no diversification at the highest level of the private sector over the last eight years, and the trend in other managerial occupational grades is more or less the same.
Static proportions can always conceal changing absolutes, but in this case they mostly don’t. The reason that transformation has stagnated is that South African conglomerates have largely directed their attention abroad since the 2008 crash ended our debt and housing-driven growth spurt.
The meager growth that was sustained came only because the state was willing to pick up some of the slack, running constant deficits of around 3,4% of GDP and continuing to create jobs where the private sector has retreated. At a macroeconomic level the consequence has been a looming public debt crisis, a grave threat to the party-state machine which the new finance minister Malusi Gigaba is desperately trying to head off with (radically transformative) firesales of public assets.
At a political level the consequence has been a revanchist patrimonialism, aggrandizing those in the party-state who have no truck with the private sector, who support any project to use state power to crack open white dominance of the economy, no matter how dubious its protagonists. Lobbyists of black professionals and tenderpreneurs made their split with white business early when the Black Management Forum left the Business Unity South Africa in 2011 – since then they have become important backers of Zuma and Gupterization.
Other sections of the alliance that brought Zuma to power on the other hand, those with a popular base, have been weathered by the effects of the economic crisis and the contradictions of fighting for working class gains within a party beholden to middle- and upper-class interests. The famous slogan of Zwelinzima Vavi, former general secretary of the country’s largest trade union (in an alliance with the ANC), of a “Lula Moment” demanded that Zuma ditch his business backers and pivot to the workers and communists that brought him to power. Instead, he’s done the opposite.
The Treasury’s macroeconomic policies shaped the context in which these shifts occurred. That’s why we can’t afford to stave our critiques of them and other groups even as we march in the same demonstrations.
Fighting corruption is a precondition for improving socio-economic conditions, as Achmat points out. But improving socio-economic conditions may also be a precondition for fighting corruption. We need a movement that builds power for both struggles at the same time. The #UniteBehind initiative seems as good a place to start as any.
*Culled from Africa is a country