Charges of fraud against South Africa’s finance minister, Pravin Gordhan, have been dropped. No disgrace attaches. It’s largely accepted he’s been framed for trying to expose a web of cronyism and graft spun from President Jacob Zuma’s office. Support for the minister’s efforts to ‘clean-up’ government is growing. But so too is the recognition that capitalism without corruption is fantasy.
The idea that wealth is appropriated and accumulated solely through legitimate business activity in the market is profoundly misleading. It’s a text book fiction says anthropologist and geographer David Harvey.
There is a vast array of what we would now consider extra-legal
activities, such as robbery, thievery, swindling, corruption, usury,
predation, violence and coercion, along with a range of suspicious
and shady practices in the market (monopolisation, manipulation,
market cornering, price fixing, Ponzi schemes etc.)…It is stupid to seek to understand the world of capital without engaging with the drug cartels, traffickers in arms and the various mafias and other criminal forms of organisation that play such a significant role in world trade.
Exploiting workers may lie at the heart of capitalism but it is just part of a process of systematic dispossession.
Bankers do not care in principle, for example, whether their profits
and excessive bonuses come from lending money to landlords who
extract exorbitant rents from oppressed tenants, from merchants
who price-gouge their customers, from credit card and telephone
companies that bilk their users, from mortgage companies that
illegally foreclose on homeowners or from manufacturers who
savagely exploit their workers.
The face-off between Zuma and Gordhan is not a battle between good and bad factions in government. The ANC’s moral disintegration has been entirely predictable. Roger Southall, sociology professor at Wits University says the rot began in the late 80s when the party ditched the idea of seizing power with popular support and settled for an accommodation with large scale capital.
These negotiations were hidden from the public. The commitment to the Freedom Charter was jettisoned and instead the ANC courted the rich and powerful. Black Economic Empowerment, more plainly a program for the creation of a black bourgeoisie, became the banner of the National Democratic Revolution.
The strategy was to target the parastatals – accounting for around 15% of GDP- that fell under government control. But transferring state-owned enterprises on discounted terms to blacks via privatisation was limited by the amount of money aspirant black capitalists could raise. By default the ANC’s control of the state machinery became a source of tenders for its cadres. In a racially polarised capitalist economy this provided opportunities for careerism, personal enrichment and corruption – and not least for the funding of the ANC itself.
As the ANC acknowledges, it is a multi-class movement composed of capitalists, middle class, workers and the poor. As such it is a host to class struggle within a society imbued with capitalist values and consumerist temptations. Despite the early efforts of Congress of South African Trade Unions and the South African Communist Party to shift policy to the left, many within their own ranks have fallen victim to the temptation of following a political path to personal enrichment. In such a situation, it is not surprising that it is the rich and the powerful who have benefited overwhelmingly from our democracy.
An open letter from Dr Kellie Gillespie, head of the anthropology department at Wits, to Minister Gordhan reflects the reality.
I am sure you are aware that at the heart of the student protests is an issue that rests squarely in your office…Over the past 20 years, year on year, your department has cut per capita funding to universities, a situation which has forced rising student fees and incremental privatisation of our public universities. So many of our students are struggling to make ends meet. Just today I had a first year student, with three wounds on his body caused from Tuesday’s rubber bullets, come and ask me for R100 (£5) because he has not eaten in two days. A few days ago I had to buy tissue oil and sun cream for another student because she could not afford these items she was told to use after her face was burned by a stun grenade… While I am furious with Wits management for its role in the militarisation of campus that exacerbates and flares this conflict, they have no power to change the underlying structural conditions that fuel campus violence. You do.
Minister Gordhan and his government have failed to redress an apartheid legacy of inferior education and crushing poverty. What they have managed, over 22 years in power, is to secure the advance of the established capitalist class, broker the emergence of crony black capitalism and leave the majority of South Africans disappointed, desperate and in despair. The reason is straightforward. Speaking to journalist John Pilger, President Mandela said: “You can put any label on it if you like but for this country, privatisation is the fundamental policy.”
The appropriate label is neoliberalism, the assertion that profit-driven private provision of all goods and services in an unregulated global market is the most efficient form of economic organisation. This is a great excuse for privatising public utilities and social services. But there is little – if any – empirical evidence to support the claim that private corporations are smarter.
Wealth isn’t trickling down as promised. Its gushing upwards ever faster; 40% up for the rich and 41% down for the poor since 2010. One percent of humanity is now wealthier than the other 99%. Some 60 individuals at the top own more than the 3.6 billion people at the bottom. On a planet already at ecological breaking point the obsession with indiscriminate and compound economic growth for the benefit of a few is clearly insane. It reflects a condition for capitalism’s survival, not the needs of humanity.
Neoliberal governments under the guise of ‘economic policy’ deliver a framework for corporatisation; for asset stripping and looting the state, transferring national resources to private investment portfolios, commodifying the provision of health, welfare and education services, promoting financialisation and speculation and encouraging immigration to drive down wages and dilute working class solidarity.
Austerity – the delusion that countries, like households, must tighten their belts to pay off their debts in hard times- is simply a pretext to slash social spending, reduce corporate tax and decimate the poor. Meanwhile a flood of cheap money rinses the toxic assets of banks, inflates asset prices and makes the rich even wealthier.This scam is called quantitative easing.
Geographer Danny Dorling describes the outcome in Britain.
The rich are getting richer. By 2014 the combined wealth of the 1000 richest people in the UK had risen to £519 billion, a 55% rise in just 4 years. And these were the same four years in which most of the people in the UK became poorer, in which food banks became normal, in which evictions arose and life expectancy for elderly women fell. Just spreading that rise over every family in the UK would have made each over £6000 better off… A year later in 2015 the wealth of the richest 1000 families had grown again by £28 billion in little more than a year… They doubled their money in just 6 years…If this trend continues the UK will become a place where the majority of people will pay most of their future income in rent to the rich.
The sharp surge in inequality has been pinned on the Bank of England’s efforts to stimulate a recession-ravaged economy by pumping some £375 billion into the system. Positive Money observes:
The newly created money…went directly into the financial markets, boosting bond and stock markets nearly to their highest level in history…However, 40% of the stock market is owned by the wealthiest 5% of the population, so while most families saw no benefit from Quantitative Easing, the richest 5% of households would have each been up to £128,000 better off. Very little of the money created through QE boosted the real (non-financial) economy. The Bank of England estimates that the £375 billion of QE led to 1.5-2% growth in GDP… It’s incredibly ineffective, because it relies on boosting the wealth of the already-wealthy and hoping that they increase their spending. In other words, it relies on a ‘trickle down’ theory of wealth. A far more effective way to boost the economy would have been for the Bank of England to create money, grant it directly to the government, and allow the government to spend it directly into the real economy.
QE has exposed the ability of the central bank to fund government spending. There is no need to borrow at extraordinary cost from private banks which simply create money out of thin air – a fact confirmed by the Bank of England in 2014. The development of basic and urgent infrastructure in South Africa has not been constrained by a lack of money – or the threats of financial markets and compromised ratings agencies – but by the government’s determination to boost corporate profits.
Growth through asset inflation in the UK is simply a way of redistributing wealth to the rich. But it’s also meant increasingly unaffordable housing, particularly in London where property investment has become a channel for international money laundering. More to the point 0.36 percent of the population own 70 percent of the land forcing up prices and profits, entrenching inequality and holding society to ransom.
The use of land for the endless accumulation of private wealth rather than the common good is socially destructive and criminal. The abolition of the power of landed property to extract rents is critical and urgent both in the UK and South Africa. Here’s David Harvey again.
Land…has become even more prominent as a form of fictitious capital to which titles of ownership (or shares of future rental income) can be traded internationally. The concept of ‘land’ now includes, of course, all the infrastructures and human modifications accumulated from past times (for example, the subway tunnels of London and New York built more than a century ago), as well as recent investments not yet amortised. The potential stranglehold of the rentier and the landed interest on economic activity is now an even greater threat, particularly as it is backed today by the power
of financial institutions that revel in the returns to be had from
escalating rents and land and property prices… (this has) now morphed into the astonishing ‘land grabs’ going on around the world (from the resource-rich regions of North-east India to Africa and throughout much of Latin America) as institutions and individuals seek to secure their financial future by ownership of land and all the resources (both ‘natural’ and humanly created) embedded therein. This suggests the arrival of a coming regime of land and resource scarcity (in a largely self-fulfilling condition based on monopoly and speculative power of the sort that the oil companies have long exercised).
Britain provides a model of corruption that eclipses best practice in the Rainbow Nation. But the current frenetic ‘smash and grab’ phase on the island is indicative of deeper systemic malaise.
Professor Wolfgang Streeck, director at the Max Planck Institute for the Study of Societies, says for almost four decades rising inequality has been accompanied by a persistent increase in overall debt and steadily declining economic growth, mutually reinforcing trends reflecting a protracted and inexorable process of decay. Capitalism has ceased to be a self-reproducing, sustainable, predictable and legitimate social order.
The image I have of the end of capitalism—an end that I believe is already under way—is one of a social system in chronic disrepair, for reasons of its own and regardless of the absence of a viable alternative… In contrast to the 1930s, there is today no political-economic formula on the horizon, left or right, that might provide capitalist societies with a coherent new regime of regulation. Social integration as well as system integration seem irreversibly damaged and set to deteriorate further…Eventually, the myriad provisional fixes devised for short-term crisis management will collapse under the weight of the daily disasters produced by a social order in profound, anomic disarray.
Before that happens America intends to secure full spectrum dominance of the planet under cover of a bogus war on terror. A trillion dollar upgrade of its arsenal will boost flagging production at home, provide more muscle to plunder resources abroad, secure the hegemony of the dollar and brace a collapsing financial system. Perhaps this will buy enough time to allow capitalism to mutate into 21st century fascism.
The post 9/11 wars and the reckless creation of balance sheet wealth proceeds unchecked. Hilary Clinton has no qualms about provoking a nuclear war with Russia and Britain provides the most vociferous of cheerleaders.
Till recently a Westminster consensus in the pocket of global corporations have stifled public dissent over austerity or imperialism. The election of Jeremy Corbyn as leader of the Labour Party has broken the silence. Speaking at the party conference in Liverpool in September, shadow chancellor John McDonnel said:
Our generation always thought that from here on there would always be a steady improvement in people’s living standards. We expected the lives of each generation would improve upon the last. Successive Tory governments put an end to that. Under Jeremy’s leadership, I believe that we can restore that optimism, people’s faith in the future. In the birthplace of John Lennon, it falls to us to inspire people to imagine. Imagine the society that we can create. It’s a society that’s radically transformed, radically fairer, more equal and more democratic. Yes, based upon a prosperous economy but an economy that’s economically and environmentally sustainable and where that prosperity is shared by all. That’s our vision to rebuild and transform Britain. In this party you no longer have to whisper it, it’s called Socialism.
The persecution of Minister Gordhan is ugly and provides scope for dangerous opportunism and intervention. It is reported he is prepared to die to save South Africa from thieves. But until he shouts socialism, South Africans should be cautious about the halo.