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Umsebenzi Online

Volume 2, No. 11, 4 June 2003

In this Issue:


Red Alert

The relationship between the democratic state, the working class and private capital: The key challenge towards and beyond the Growth and Development Summit

By Blade Nzimande, SACP General Secretary

On Saturday 7 June 2003, the long awaited and spoken about growth and development summit (GDS) will take place. The last few weeks and days in the negotiations towards an agreement a number of issues have come to the fore. One of those issues relates to the attitude and approach of the democratic movement and the democratic state towards private capital, and the role that such capital should and can play in the overall developmental challenge in our country.

One acid test for the GDS and post-summit processes will be the extent to which the democratic movement is able to collectively pressurise private capital to act in a manner that addresses the developmental challenge. In concrete terms this means the mobilisation of large volumes of domestic private capital towards job creating investment. One critical lesson over the past 9 years is that one of the key obstacles to growth and development is the unfettered market economy and lack of decisive transformatory measures of our capitalist economy towards meeting the needs of the majority of our people. Indeed it is obvious that in the last instance no capitalist economy can ever be able to overcome underdevelopment. But the question remains as to whether we have pushed private capital hard enough, albeit within the constraints of a capitalist economy, to address some of the key development challenges we face? A related question is whether we do have a state that objectively has the capacity to do that? Also has the working class mobilised enough towards an offensive to pressurise private capital towards our growth and development objectives? It is to some of these questions that we must turn our attention to as the context within which to locate the challenge of the GDS and the post GDS processes.

Relationship between Growth and Development

It should be admitted upfront that despite the major gains made by the working class since 1994, both the democratic state and the working class have not managed to pile enough pressure on the question of the mobilisation of domestic private investment towards a job-creating economy. Progress made in bettering the lives of our people has largely been as a result of state initiatives and mobilised pressure by the working class (eg. water, electricity, housing and struggles around the transformation of the financial sector, jobs and poverty eradication). In the main we have not succeeded in grounding our interaction with private capital around our Reconstruction and Development (RDP) perspectives and objectives. This, amongst other things is illustrated, by the attitude of business towards the relationship between growth and development: a fundamental relationship and defining feature of the RDP. For instance in its initial submission to the GDS, private capital completely inverts the RDP paradigm:

The GDS can help to develop consensus around the primacy of growth in the hierarchy of objectives for South Africa. This is essential if we are to achieve an economic growth performance that will result in increased job creation, enhance the country’s ability to compete in a global economy and succeed in attracting both domestic and foreign investment. Economic growth is a precondition for development.

From this premise South African business has therefore continued to prioritise global competitiveness at the expense of domestic investment, thus creating an accumulation regime premised on a trickle down approach. It is no wonder that in its GDS submission private capital expects government, labour and communities to make definite commitments. For business all it has to do is to expect an even more business friendly policy environment, in order to be globally competitive and continue to exploit the working class, as a precondition for development. Yet in the RDP growth is premised on addressing the national developmental challenges of our country. In other words business wants more of the same, instead of a radical break with the current accumulation regime.

It is indeed disturbing though expected that all that business is offering at the moment is some kind of expanded, voluntary corporate social responsibility types of interventions without a fundamental transformation of the formal economy. More of the same will not set our country on a growth path. Evidence to this is the fact that despite rising productivity and fewer days lost through strikes since 1994, the share of income by the working class has declined significantly. Despite the fact that large South African companies are awash with cash there is no increased investment in the domestic economy, and this is the crucial challenge for growth and development. Despite the welcome increased commitment by government to invest in infrastructure in the medium term expenditure framework, there are no similar commitments by private capital to match or even better these investment commitments. All these are manifestations of inadequate state and working class pressure on private capital towards job-creating investment.

Balance of Class Forces

A number of other examples can be cited to illustrate what is increasingly becoming an arrogant attitude by private capital and a growing culture of entitlement to accumulation without investment and addressing the development challenge in our country. The arrogant resistance by white agricultural capital to implement the sectoral determination of a minimum wage for farmworkers is one illustration of the extent to which there is not enough pressure by the state and the working class towards the transformation of land and agrarian relations in favour of the workers and the poor.

Again we are now seeing once more resistance to community reinvestment legislation, particularly the outlawing of redlining, by the financial sector. This matter is yet again going to be a test on the capacity of both the state and the working class to pressurise capital towards investment in housing. It is a matter of serious concern that the South African Reserve Bank seems to be consistently positioning itself as the defender of the big banks with hardly a whisper about the financial services needs of the overwhelming majority of our people. The position of the Reserve Bank on the Community Reinvestment Bill is another case in point where an important state institution seems to be more concerned about concerns of private capital at the expense of working class concerns. Frankly, even the progress realised towards the transformation of the financial services sector to serve ordinary people and the drawing up of a financial services charter is largely a result of the SACP-led mass campaign in this regard.

The mining bosses not so long ago threatened less investment if the state and the NUM were pushing for a more stringent mining charter. Currently the mining bosses are threatening to retrench more than 50 000 workers if the NUM pursues its demand for a 20% wage increase, and yet with a weaker rand mining houses had raked in huge profits. But at the same time a positive lesson that can be drawn from the current transformatory struggles in the mining sector is that it is indeed possible for the state and workers to push private capital even more towards investment and transformation. Where the state and the working class have collectively and decisively taken a stand to push private capital towards developmental challenges, positive results can be seen.

One the whole, despite the many gains for the working class, the balance of (class) forces currently stand in favour of the capitalist classes over the working class, hence capital can arrogantly demand more of the same from the growth and development summit, whilst practically offering very little. This cannot be allowed to continue. At the same time the working class needs to be realistic about what the GDS can achieve this coming Saturday. What we have not won on the ground through mass and organised working class struggles, cannot be won on the GDS table. At best we should seek to achieve at the GDS a minimum platform and set of measures that will give the working class further leverage to wage major struggles towards the transformation of our economy in favour of the workers and the poor.

However we must also frankly admit that the hand of the democratic movement at the GDS has been weakened by a lack of a prior agreement on a common strategy and approach towards private capital. This has also been exercebated by a lack of agreement on a common economic strategy within the alliance and therefore its common approach to private capital. The lesson out of this is that a precondition towards growth and development in our country principally rest on a common approach and consensus between the state and the working class over the direction of economic policy. It is only on this basis that we can collectively seek to impose our own advanced alternatives on private capital. To achieve all this a common alliance approach is of absolute necessity. This is the basis upon which we should approach the GDS and post GDS processes.

Driving a Growth and Development Strategy

The fundamental task of driving a growth and development strategy beneficial to the workers and the poor rest on an organised, politically conscious working class, able to drive a socio-economic transformation programme to benefit our people and fundamentally transform the current accumulation regime. This will also be the locomotive for a common alliance strategy and programme. This means, amongst other things, significantly increasing the capacity of organised workers to drive sector summits towards job creation and poverty eradication. This means putting as much effort on transformation of the key sectors of our economy as we put into collective bargaining. As a matter of fact some of the key sectoral transformation challenges should be forced onto the collective bargaining table, as powerfully as wages and conditions of service.

This also poses some fundamental challenges to the SACP, tasks that have increasingly been made even clearer by the processes surrounding the GDS. For the SACP, this means we need an escalation of our effort of building a politically conscious working class and strengthening ourselves so that the working class can act with a clear political purpose. Our own medium term vision should be that of ensuring that no site of power and influence in society can exercise that power and influence without centrally taking the interests of the working class into account. The struggles around the post-GDS processes should provide just such one critical platform through which we can pursue our overall medium term vision and goals.

On the eve of the GDS we need to reiterate some of the key elements of this minimum platform:

Insisting on labour absorbing projects in both the private and public sectors, and transforming the procurement strategy of the state as well as investments in infrastructure as a crucial lever in this regard

Commitment towards the creation of a large social sector for sustainable livelihoods, including co-operatives, as crucial instruments in building a working class driven momentum for socio-economic transformation. Such a social sector should not be seen as a substitute for transformation of the formal economy, but in itself should be a lever for the further transformation of the formal economy. To this end we welcome what appears to be a consensus in the run up to the GDS on building a large co-operative sector and support mechanisms for other local economic initiatives

Increased investments in infrastructure not only by government, but by private capital as well, with a commitment to joint supervision of such investments, and increased labour absorption capacity with such investments. Such commitments should lay a basis for working class driven sectoral summits towards job creation and poverty eradication. The financial sector agreement has already laid a sound basis towards this goal, and therefore should be incorporated into the GDS main agreement.

Such agreements should not foreclose ongoing struggles and debates about overarching appropriate macro and micro economic policies

These minimum commitments (and they should be regarded as such) should lay the basis for the bigger struggles towards the development of an overarching industrial strategy and progressive transformation of the accumulation regime in favour of the workers and the poor.

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