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Issue 152 - Third Quarter 1999

CONTENTS

EDITORIAL NOTES
40 years of the African Communist
Hamba kahle comrade Mwalimu
The SACP's National Strategy Conference

DOCUMENTS
Central Committee 17-18th July 1999
Our strategic approach to governance and transformation - Political Report of the National Secretariat

SACP NATIONAL STRATEGY CONFERENCE
A developmental path for SA - general secretary's opening address
Resolutions

DEBATE
Lessons from the Public Sector Wage Dispute - by David Makhura and Tebogo Phadu

AFRICA
Globalisation, African Economic Crisis and South African vulnerabilities - by Patrick Bond

BOOK REVIEW
The South African struggle viewed from Moscow - Blade Nzimande reviews Vladimir Shubin's "ANC: A view from Moscow"

 EDITORIAL NOTES

40 Years of the African Communist

Forty years ago, in October 1959, a cyclostyled journal, calling itself The African Communist, was furtively distributed, mainly in Johannesburg. A note at the end read somewhat cryptically: "This magazine...has been started by a group of Marxist-Leninists in Africa".

In his recent autobiography (Memory Against Forgetting, Memoirs from a life in South African politics, 1938 - 1964), SACP veteran Rusty Bernstein has a fascinating account of the circumstances surrounding the emergence of the new publication. The Communist Party of South Africa (founded in 1921), had been banned by the incoming apartheid regime in 1950. This was to be the first of a barrage of apartheid laws suppressing democratic opposition. In the following years communists slowly rebuilt an underground SACP, while continuing to work legally in the mass formations of the time - the ANC and other Congress structures, and the trade union movement.

The re-launched SACP kept an entirely secret profile, and its existence was only known to members. By the late 1950s, however, there was a growing debate within the ranks of the clandestine party. Invisibility was not intended to be permanent, and there were many who felt that the time had come for the party to present itself and its policies publicly, albeit from the underground. Matters came to a head at the National Conference in a factory in Industria, Johannesburg around 1959. A resolution was proposed that the party should make an immediate public announcement of its existence.

"Conference", as Bernstein remembers, "was divided down the middle. The supporters of the resolution argued that our cloak of secrecy was spreading the illusion that socialism could be achieved without an independent party of the working class. Lenin was much cited in support. Those against were less concerned with ideology than with the practical consequences of emergence. They claimed that our invisibility had dispelled our allies' fears of a separate, and perhaps rival, communist agenda. Emergence would be, at best, a gesture; but it could disrupt the established relations of trust between communists and the rest of the mass movement, and might well induce the legal organisations to repudiate co-operation with us in order to protect themselves."

Neither side was able to persuade the other, and passions were riding high. Even before the Conference, Bernstein had been mulling over the idea that the party should produce political publications without any formal party imprint. "It seemed a good time to put such a proposal forward", he remembers wryly. "The publication of a regular journal of Marxist views on African and international affairs, without any identifying party label, seemed to take the middle ground. I made the proposal; both sides agreed to it, perhaps as much as a gesture of peace as for its intrinsic merit."

The "AC", as it has come to be known, has now been appearing for forty years. After the first cyclostyled Johannesburg edition, numbering around 1000 copies, it was obvious that there was a greater demand than could be managed with local resources. Subsequent issues were printed and dispatched as a fraternal contribution by the Communist Party of Great Britain - while editorial control remained South African, under the first editor of the publication, Mick Harmel. Later, as the resources and scope of the AC broadened, the printing of the publication was generously undertaken by the Communist Party (the SED) in the German Democratic Republic. This arrangement persisted until 1990, when the entire operation of the AC finally came home. During the late 1970s and through the 80s great ingenuity was required to get the publication into South Africa. It was printed in a miniaturised version on flimsy paper, or with false covers. In this way, thousands of copies, claiming to be about "Landscape Gardening - flowers and fruits of field and hedgerow", or "Antiques Fair, Porcelain Figurines - a buyers guide" were smuggled in.

The African revolution

An internal party debate about how to build public profile without compromising an illegal structure - and without compromising relations with allied (but then still legal) formations - were the immediate circumstances behind the launch of the AC back in 1959. But there were also other major circumstantial factors that inspired the AC. This is very apparent from the contents of the first issue.

"So rapid and so fundamental are the changes that are sweeping over the continent of Africa and its peoples that it is perfectly proper to describe them as revolutionary. The whole of Africa is in revolt", writes one contributor (with the pseudonym, George Maxwell). "In 1950 there were only four independent states in Africa...Today independent states embrace one-third of the area and half the population of Africa".

The 1959 first issue of the AC is very much written with the sense of a vast revolutionary process sweeping through the continent. In another article, signed Toussaint (Rusty Bernstein's nom de plume, which recurs many times in AC articles in the following three decades) we are told: "In Engels' own day, who would have been bold enough to prophesy that imperialism's impregnable fortress in Africa would be bursting apart in revolution and upheaval within the short space of some 70 years."

This continental optimism in the first issues, an earlier version of today's African Renaissance idea, is however tempered by another understanding. "Liberation too can end in a way not intended", writes Toussaint in the same article, "already parts of liberated Africa show signs of a drift towards individual dictatorship. Where the intention was to break the economic stranglehold of imperialism, already far-reaching concessions to foreign imperialist investment in resurgent Africa are being made."

From the outset the AC is advancing a class agenda, the winds of change are sweeping through Africa - but what will be the content of liberation? Will there be a neo-colonial outcome, or will there be a genuine democratic breakthrough that lays the basis for social and economic transformation?

Intimately connected to these concerns is a debate in this first issue on the significance of the national (we would now say "patriotic") bourgeoisie. "Maxwell" argues that "up to the present the national liberation struggle in Africa has been by and large inspired and led by the bourgeoisie. The imminence of independence throughout most of Africa heralds the end of the positive contributions by the bourgeoisie...The bourgeoisie have fulfilled their historic role in the African revolution and cannot carry it any further."

An editorial note welcomes the debate introduced by Maxwell, but thinks that his statements "about the role of the national bourgeoisie in Africa are too sweeping."

Guerrilla struggles

Through the 1960s the AC continued to monitor and carry debates on post-colonial Africa. In this period it achieved a wide and influential readership amongst an emergent left intelligentsia throughout our continent. In the late 1960s and early 1970s there were important debates about guerrilla struggle, reflecting our movement's own grappling with the challenges of the armed struggle. Among the key contributors to these debates was "Sol Dubula" (Joe Slovo).

In the 1970s the AC also carried exclusive and fascinating interviews with leading Southern African revolutionaries, reflecting the close relationship of the ANC/SACP with MPLA and FRELIMO at the time. In the 1980s the AC tapped into the rising wave of popular struggle within South Africa, and a new generation of young black Marxists began to write for the journal - notable among them was Comrade Mzala (who wrote under several different noms de plume - sometimes engaging in debate with himself!).

Negotiations and freedom

Through the 1990s the AC has sought to be a platform of Marxist-Leninist thought and debate. Although the situation at home has changed immeasurably for the better, the external realities have become immensely more difficult. The AC in this last decade has, like the SACP, endeavoured to open up space to assess the successes and failures of the Communist legacy. It has seen itself as part of a global struggle for the renewal of socialism, a struggle to overcome both narrow dogmatism and sectarianism on the one hand, and defeatism on the other.

Among the issues taken up in this decade have been self-critical discussions on religion and Marxism, an interview with the late doyen of the Trostkyist intellectual tradition, Ernst Mandel, and comparative studies of societies from Central America to Asia, involved in negotiated transitions of one kind or another.

But it is the unfolding South African transition that has, naturally, been the major preoccupation. It was the AC that first published Joe Slovo's article on a strategic approach to negotiations, in which he floated the proposal on "sunset clauses", which became a turning point in the negotiation process. And it was a subsequent issue of the AC that carried the heated debate on those very "sunset clauses", with interventions by, amongst others, Pallo Jordan and Harry Gwala. The AC's editorial policy was to encourage broad movement debate on the key strategic issues of the day, in this way empowering tens of thousands of cadres.

Few journals survive four decades of unbroken publication. Still fewer survive three decades of illegality, exile, and the twists and turns of history. The AC is still here because it remains rooted in the life of the SACP, in the struggles of the South African working class, and because the awkward class questions that it began asking back in 1959 are more relevant than ever before.

Hamba Kahle comrade Mwalimu

A

In the critical decade of the 1960s, Nyerere led one of the poorest but most generous countries of Africa. In that decade, many key leaders of the ANC, Frelimo and other liberation forces were stationed in Dar es Salaam, thanks to the generosity of Nyerere and the Tanzanian people. It was in that period, and under the protection and influence of Nyerere, that a truly sub-continental collective revolutionary leadership and cadre was forged. In the 1990s we have lost some of that unity. In the coming decade, one of the ways to remember and honour Mwalimu, Julius Nyerere, is to seek to build once more a revolutionary unity of democratic cadres throughout our region.

The AC dips its banner in honour of this outstanding son of our African soil.

The SACP's National Strategy Conference

Included in this issue of the AC are documents from the SACP's National Strategy Conference held between the 3 and 5th September 1999 in Johannesburg. The 10th Congress in July 1998 had called for a strategy conference of this kind, to help to consolidate the SACP's ongoing renewal of our socialist perspectives.

The Conference provided the Party with a forum to elaborate on our understanding of the struggle for socialism within the present context of South African society, and in particular to consolidate our collective understanding on "building socialism now". There were extremely high levels of participation from all 200 delegates, including from senior delegations from our alliance partners.

The success of the first National Strategy Conference has led to an agreement that the SACP should seek to make the event annual. Indeed, even our alliance partners have insisted on this.

Documents

Our strategic approach to Governance and Transformation

In line with the SACP's commitment to transparent debate, we publish here extensive excerpts from the Political Report of the National Secretariat to the Plenary Session of the 5th Central Committee of 10th Congress (17-18 July 1999)

Our strategic approach to governance

If we were to reflect on the past five years of governance, we do indeed have a lot of lessons to learn from which we can improve our approach as the SACP for the forthcoming period. In discussing this question we need to be open, honest, frank and be self-critical where necessary, in order to re-position the SACP to play an even more effective role in governance for the next five years and beyond.

Socialism is the future build it now!

In our programme, adopted at the 10th Congress, we state quite categorically that "Socialism for the SACP is not just a vision, an ideal located in some distant future of which we can only dream. As the SACP we seek actively to build capacity for socialism, momentum towards socialism, and elements of socialism, here and now. This is why we say: Build Socialism Now!".

In identifying what this means practically we have identified a number of dimensions:

Advancing, deepening and defending the NDR. In particular here our focus has to be on building people's power so that it is the working class, the landless rural masses and the urban poor that should be mobilised to the be the main motive force of our revolution.

Rolling back the market - The SACP is committed to struggle against the overbearing supremacy of the market, which seeks to turn everything into a commodity and all of us into simple buyers and sellers. This means a struggle to decommodify an increasing number of spheres of society particularly those related to the social upliftment of the mass of our people.

Transforming the market - The rolling back of the empire of the capitalist market, based on the understanding that markets are not some "neutral" reality and that there is no such thing as a "free market". Present markets reflect the accumulated power of the capitalists. Struggles to transform the market should include development of an active labour market, the effective use of state subsidies and public sector corporations to transform the markets.

Socialising the ownership function - Amongst the most important ways to struggle for this is the building of a strong public sector in the context of fostering a national democratic, developmental state, fostering an extensive co-operative sector and struggling for effective strategic worker control over social capital.

Socialising the management function - Amongst other things this means that in the public sector we struggle against narrow neo-liberal managerialism, which seeks to weaken centralised collective bargaining. In the private sector the struggle to promote effective work-place forums to contest unilateralism by management.

These are some of the key indicators we should be using as a framework for assessing progress being made in the area of governance over the past five years. Of course our proposed National Strategy Conference will have to make a fuller assessment of the past five years from this particular standpoint.

But if we are to be honest with ourselves we have not consistently used this framework in our participation in government and assessment of the unfolding revolution. It is therefore important that in this Central Committee we should seriously reflect on how, as part of our strategic conception and approach to governance in the forthcoming period, our very own programme and objectives should guide us. Failure to do this would in reality mean that we are merely sloganising and not serious about the mission of our Party.

Role of the state in development and a people-driven transformation programme

There is a significant strategic convergence, at least at a theoretical level, in the Alliance with regard to this particular area. The Alliance document on "State, Property Relations and Social Transformation" commits the Alliance and government to an active national democratic, developmental state that should play a leading, and not just a regulatory, role in the implementation of our programme of transformation. It is indeed important that our approach to governance in this period should reinforce this perspective and approach.

Indeed, one of the most important lessons of the last five years is that the enormous progress made in the social upliftment of our people has been as a result of an aggressive state-led programme of development and social delivery. The provision of water, electricity, phone connections, houses, clinics and educational facilities to millions of our people has not been as a result of any privatisation process, nor as a result of the role of some privatised entities, but where we have pressed ahead it is as a result of an active state. These achievements have been buttressed by participation of communities through hundreds of local development committees. This should be an important lesson that we need to take forward in the current period. This, however, does not mean that private sector resources should not be harnessed, under a state-led development programme.

Yet, despite this reality, there is an intense ideological offensive in favour of the privatisation of state enterprises including those that have played the most crucial role in the social upliftment of our people. It is important for this Central Committee to re-affirm its opposition to privatisation as a political economic objective on its own; in particular in those key areas of social delivery that would make a significant contribution to a better life for all. Such an approach is required if we are to realise one of our objectives of rolling back the market, in crucial areas of social delivery and development. Our 10th Congress Party Programme commits us to a struggle to defend and extend the public sector: "It is in the context of ensuring that the state is able to set an active social and economic agenda that the SACP opposes all ideologically driven attempts to privatise public sector enterprises and resources. The private sector is not, by definition, 'more efficient' - and especially not in meeting basic social needs... Public resources must not be sold off simply to foster a new black elite. The public resources within the public sector must be used actively for development" (p.50)

Of course this does not mean that the SACP is blind to the reality that we live in a capitalist society, and we need to struggle for policies that will also force or harness private resources towards the implementation of the objectives of the Reconstruction and Development programme. The SACP is not in principle opposed to strategic partnerships between the state and private capital under clearly specified and defined circumstances aimed at enhancing the capacity of the state to meet its social obligations.

In this regard our Programme states that, "As the National Framework Agreement on the restructuring of the public sector recognizes, where the injection of extra capital or of technology is required, then partnerships, joint ventures, or partial equity sales might be justified, but these must always be subordinated to the logic of developmental transformation" (p.50). This means that such partnerships should only be embarked upon within the context of clearly defined social goals and not as a general rule, subject to maximum consultation with all affected, particularly the workers. Where the state on its own is able to effect such improvements without necessarily having to enter into private partnerships, that should be done. In addition, such partnerships should aim at enhancing the capacity of the state to drive the RDP rather than that of the private sector, and should aim at job creation, enhanced social delivery and the general social upliftment of our people. Also such partnerships should not be a cover for privatisation.

Underpinning this approach to a state-led developmental process and the defence of the public sector should be effective participation of our people in line with our commitments to a people-driven transformation process.

Developing SACP capacity to make strategic and effective policy interventions

Related to the above question is the issue of the Party to developing its policy and political positions in line with its strategic objectives. If we are to be honest with ourselves, we have in the past, particularly over the last five years, tended, with few exceptions, to follow on ANC positions without adequate strategic analysis or policy development inside the Party. One example here was our initial hesitance in our response to the macro-economic policy, GEAR. In instances where we sense our position is different from that of the ANC, we have, in a number of inner Party discussions and debates, the tendency to say we therefore cannot adopt that position because it is different from the ANC's. Of course in many instances this has been due to our lack of capacity in a number of areas to rapidly develop important positions.

To state this position does not undermine our long-standing communist practice of respecting the decisions and mandates of the other structures in which we work. Our experience has taught us that there is no necessary contradiction between upholding and defending Party positions and decisions and respecting the mandates of other structures in which we are deployed. However, there will always be tensions and even dilemmas between Party positions and those of other structures. The only consistent way to deal with such tensions is that they must be openly and frankly raised in Party structures for debate and discussion.

One of the areas that requires improvement is that since our unbanning there have sometimes been unclear articulations of Party positions and approaches by various leaders and structures of the Party. In other circumstances there is even an articulation of positions that directly undermine party policies and positions. If we are to make an impact on governance as the SACP, within the overall struggle to deepen the NDR, this practice must come to an end. We must consistently distinguish between an absence of Party positions and disagreement with those positions. In the latter cases this must be openly stated.

There are a number of problems with such an approach. Firstly, to hold a different position to the ANC or COSATU does not necessarily mean being oppositional to those organisations. Secondly, we do not add value to the ANC or government policy processes by refraining from stating our honest positions. Instead we weaken even the ANC's or government's policy process.

Thirdly, the problem with such an approach is that we then tend to evaluate our policy stances or approaches not in terms of whether we think they are right or wrong, but in terms of whether they are in line with ANC or government policies. By so doing we unconsciously weaken the debate within the Alliance itself. If our policies are wrong let that be proved through engagement rather than a priori retreat. This is tantamount to decimating the identity of the Party.

Our approach should rather be that, where some of our positions are different to those of the ANC or government, we should engage the ANC or government on those issues. That is how we add value to the Alliance policy formulation. If there is one lesson that we can learn from the elections campaign it is that we managed to add value to the campaign by also campaigning organisationally as the SACP. It is not through hesitance in expressing our positions that we add value to Alliance and government policy-making processes, but by bringing our policy perspectives and views, in a principled and comradely manner, into Alliance and government discussions.

Flowing out of the above, one of our consistent weaknesses has been a failure to intensify our efforts in building capacity to develop policies, particularly in those areas which are of strategic importance to us. This Central Committee needs to give a clear directive that we should systematically seek ways to improve our policy-making capacity as the SACP. This is a critical component in our strategic approach on governance, and the way in which we seek to influence government policies.

Deployment and accountability to the SACP

At the opening of this input we correctly emphasised the significance of the election and appointment of so many communists to key positions in the legislatures and the executive. But at the same time is it not time now that we honestly ask ourselves how the holding of such positions is practically and substantively advancing the overall strategic objectives and goals of the SACP? If we are to be honest with ourselves, we have hardly been asking this question. In addition our experience over the past five years is that generally, with some exceptions of course, deployment to government has seriously deprived the SACP of some of its key cadres in day to day Party work. Our experience is littered with hundreds of daily, weekly and monthly excuses from many of our comrades for not attending Party meetings or doing Party work on grounds of government business. In some cases there has been downright disrespect or disdain for Party structures or directives because some comrades tend to regard government work as more important than SACP work. Yet some of these same comrades never miss a single ANC meeting! These habits are in fact found throughout all levels of Party structures. We need to bring this to an end as a matter of urgency if we are to build this Party as a serious organisation.

In highlighting the above we by no means underestimate the demands that are placed on our comrades, and for that matter we should be sensitive to those. But at the same time being sensitive to this reality does not mean we should not insist on all communists to make adequate time for Party work. The only way to correct some of these is to attend to four critical issues.

The first one is that of effectively combining government or parliamentary work with Party work. Our approach should be on how to use our deployment in government or other structures to enhance Party work. It is incumbent upon every Party leader for instance, when visiting any area, to ensure that Party structures are informed ahead of time and an effort is made to participate in Party activity in various areas. This requires that we need to structure our government work deliberately to create space for Party work. In this regard the Provincial Secretaries need to play an effective co-ordinating role. If we are to consistently follow this guideline our deployment in government or parliament can dramatically enhance the participation of comrades so deployed in Party work.

The second issue is that of ensuring that CC comrades deployed in various provinces and PEC members deployed in various districts are held to account for the work they do in those areas. Again provincial secretaries need to ensure that they effectively co-ordinate and supervise such work. This will concretely require that all provincial reports to the CC must from now onwards incorporate reports on work done by CC and PEC members in their respective areas of deployment.

Thirdly, the Alliance as a whole should seriously look into the question of deployment of public representatives in such a way that some of them are strategically deployed to pay more attention to implement the programme of the Alliance. For example some of the ex-COSATU MPs should be given the responsibility of ensuring that they work closely with COSATU including directly assisting in building and strengthening COSATU structures. A similar approach should be adopted with regard to the SACP. This is in fact already incorporated in the Alliance Programme adopted in the Alliance Summit of 24-25 October 1998. On this matter the Alliance programme states that "In seeking to galvanise our organisational work, we need to understand that we have a major resource in the several hundreds of ANC MPs, MPLs and councillors. Many of these are full-time, political cadres. Their activities must connect much more dynamically with the proposed (Alliance) programme of action. We now need to ensure that this is implemented as a matter of urgency.

Fourthly, all members of the Party in government, particularly those holding executive positions, should be periodically given an opportunity to address Party structures on the work they are doing and issues that particularly require the attention of the Party. This Central Committee should begin to set an example in this regard. Such a practice will enhance the accountability of comrades to Party structures. This practice should be replicated throughout all the levels of the Party structures.

Systematic human resources development for Party cadres

Another key strategic issue in relation to our approach to governance is the systematic development of Party cadres in key areas of governance. Indeed, through our location in various sectors of governance, Party cadres are gaining a lot of skills and experience particularly in government. However we will need to focus systematically in this area so that we are also able to use our strategic location in the Alliance as well as both inside and outside government in key areas like the economy. In particular we need to ensure that our women cadres are also systematically developed in the various areas of governance and other skills. This requires that we also begin to think about strategic deployment as part of developing party cadres. It is also from such training that our policy capacity can be further enhanced.

Building the Alliance and implementing its programme

All the above objectives will not be realised unless the Party is in the forefront of building the Alliance and ensuring that its programmes are implemented. The reality at the moment is that the functioning of the Alliance is weak due to the absence of effective co-ordination at all levels, particularly at subnational levels. The Alliance adopted a very comprehensive programme of action in October last year, it is time now that we integrate this programme into our own programme and ensure that our own activities consciously reinforce the Alliance programme.

It is the above framework and context that should provide the content for our strategic approach towards governance in the current period. It is only such a focus that will also enhance the impact of the SACP on governance, within the overall struggle to deepen the NDR and lay a firm foundation for socialism.

Key areas and issues of governance

Having outlined a strategic framework within which to locate our role in governance, it is now important to turn to some of the key issues that this Central Committee will have to consider as a basis for concrete intervention and programmatic approach to governance by the Party in the immediate period and during the next five years.

Job Loss Crisis

The job loss bloodbath that is under-way in our country has multiple causes, most of which relate to an historically mismanaged economy which has been characterised:

  • by an absence of clear, strategic industrial policy
  • by many sectors that were non-competitive
  • by inappropriate capital intensive approaches
  • by a massive neglect of skills training and re-training
  • by an over-reliance on un-beneficiated exports for foreign currency earnings (gold accounts for 4 percent of GDP, but is still our top foreign currency earner at 17 percent)

Clearly major restructuring of our economy has been and is essential. But what kind of restructuring? One view is that all of the above structural problems require, as their solution, a painful but necessary implementation of liberalisation, privatisation, and deregulation measures to attract investors, who will then help the economy to grow once more and meet developmental objectives. In this perspective the job losses of the last five years (some 500,000) are a tragic but inevitable consequence of this necessary restructuring.

We have been promised, by some leading government economic ministers, that the restructuring reforms are, however, now beginning to kick in, and we can in the coming years expect sustained economic growth and resulting job creation. Evidence for this relative optimism is said to be the revised growth statistic (showing moderate growth for the first quarter), declining interest rates and a low, stabilised inflation, an improved balance of payments situation, and, above all, the fact that South Africa's economy, while suffering, survived last year's global crisis relatively better than some other economies. Much of this success, according to key government economics ministers, has to do with government's preparedness to "stick to its macro-economic guns", in spite of opposition from Alliance ranks, and in spite of the difficulties.

Clearly we need to continue to assess and debate the degree to which all of this is accurate. The argument presented above by leading comrades in government marks a significant departure from the RDP perspective of continuously connecting growth and development, in favour of pursuing growth through private sector investment first, in order to be able to address developmental priorities (jobs, social delivery, infrastructure) later. The fact that this perspective is a departure from the RDP does not prove that it is wrong. Our objective should be to ensure that we have sustainable economic policies (and not to win a debate). Hopefully, therefore, the optimism of some of our ministers that a turn-around is coming is not misplaced.

But we need, also, to look at the jobs crisis in more specific terms. In what follows we try to pick up on a few salient areas.

Gold-mining

The provisional liquidation of ERPM, with a resulting 5000 jobs lost, has once more focused attention on the terrible jobs attrition that has been happening in the gold mining sector. 90,000 miners were retrenched in 1998. About the same number could be threatened with job losses this year.

The gold crisis is linked, most immediately, to the fact that the international gold price is at its lowest levels for 20-years. These low levels are, in turn, attributable to several factors - major industrialised economies are facing not inflationary, but deflationary pressures. Gold's traditional role as a hedge against inflation is eroded in these conditions.

The excessive over-valuation of US stocks makes speculative gains on Wall Street more attractive, than simply storing value in the shape of gold.

Partly linked to these considerations, and partly independent of them, is the move by some European banks to sell gold holdings (the Bank of England auctioned 25 tons on July 7, and proposes to sell more; the Swiss Central Bank and others are also selling, or proposing to sell gold); The IMF plan to sell 10 million fine ounces of gold to cover the costs of "debt relief" for most heavily indebted nations.

Finally, all of these circumstances are also encouraging speculators to sell gold short, deriving huge speculative profits from the current situation.

While it may be difficult for us to play a major role in influencing the international gold price, the points noted above at least raise some issues around which we might begin to base a more coherent set of practical interventions and short, medium and longer-term planning:

To what extent is the current gold price the product of cyclical factors in the world economy? Will deflationary pressures continue? (they probably will). Will the Wall Street bubble persist? (probably not).

A better understanding of these kinds of issues can better help us to plan strategically around the gold industry in our country. If the present downward price spiral is likely to persist for a decade or more, we may have to bite the bullet, doing what we can in terms of social planning and cushioning the blow on retrenched workers and devastated mining centres. If, however, the present non-profitability of many (often reserve rich) shafts is temporary, then we might more intelligently consider ways of sustaining them and their valuable infrastructure in anticipation of a turn-around. We cannot, however, continue to operate a core industry (that earns 17 percent of our foreign currency, and employs 5 percent of our work force) as if its survival rested on a daily market price, or on an untested assumption that it is dying industry.

Have we done enough to impact upon the IMF and European Central Banks?

On July 7 Cabinet criticised the Bank of England and British Government for the gold sales and for failure to consult adequately. At the same time, Cabinet also reversed its decision to "support an IMF gold sale of 5 million fine ounces" for debt relief, and announced its decision to oppose IMF gold sales. These decisions are welcomed, but the government stance on the IMF came very late. Back in May the SACP called for a much stronger stand from government - we were cautious in our wording because we were in the midst of an election campaign. It is difficult to understand, however, why government was so timid on the matter back in April and May, it is a timidity that seems to surround the whole issue of Third World debt, as if we were anxious not to imply that we were contemplating some kind of unilateral debt renunciation. We need to send clear and more consistent signals - the Third World debt is not particularly our own immediate problem (our debt being largely internal), but we are active protagonists of debt relief and debt cancellation for many of our neighbours and other poor Third World countries, and we oppose the sale of gold reserves to pay for such relief/cancellation.

How do we strengthen the Gold Crisis Committee, and other co-ordinating structures?

The Gold Crisis Summit and resulting Crisis Committee were convened largely at the initiative of NUM. For the better part of a year, the relevant government ministry has been passive and, at best, reactive. There are signs that the ministry will now become much more active. We must ensure that this happens, and that the new minister enjoys full support in this work. It is critical that the GCC, while addressing immediate crises, also helps to facilitate broader, strategic discussion and planning - in line with the issues raised above.

Parastatals - and the Transnet case

The job loss crisis is also heavily focused on key parastatals - with job losses looming in Telkom (some 10 000), and especially in Transnet's subsidiary, Spoornet. On July 8 Spoornet management announced that a massive retrenchment exercise would be implemented over the next three years, cutting as many as 27 000 jobs - more than half of the present 41 000 workforce.

Management and much media comment have been presenting these huge job cuts as regrettable but inevitable and part of a general international trend, in which public utilities are being forced to cut back on operations, streamline and offer concessions to the private sector. Again, these claims might have some validity, but it is impossible not to notice that on this front, too, there has been considerable strategic confusion around the role of parastatals in our new democracy, and particularly their place in an overall industrial policy grounded in our RDP objectives.

The National Framework Agreement of 1996 went some way in clarifying the objectives of restructuring the public sector in general, including the parastatals. It listed, in order of priority, the objectives to be:

Restructuring was in order to implement our basic, social delivery, RDP goals;

It would not be "ideologically" driven (i.e. we should move away from mechanical privatisation versus nationalisation positions)- whether restructuring to meet RDP objectives involved total, partial or no privatisation, or involved the extension of the public sector - should be measured against RDP goals, and should be determined on a case by case basis.

Restructuring would obviously have to occur within the parameters of fiscal sustainability

Restructuring should address the key priority of job preservation and job creation, as much as possible, while being consistent with the first (overall RDP implementation) objective.

That the restructuring process should be essentially negotiated and bilateral (government and unions) in character, and that the private sector should not be allowed to unduly influence the process.

While the three-year life span of the NFA is now over, these basic strategic perspectives surely remain consistent with ANC, SACP, Cosatu and indeed government policy? Indeed, cde Jeff Radebe, in his capacity as Minister of Public Enterprises has also strongly re-affirmed the NFA approach, and specifically in regard to Transnet.

The NFA perspective is also strongly endorsed in the ANC's 50th National Conference (Mafikeng) Resolutions, in particular, sub-section 4.3 of the Economic Transformation Resolution, which states the three priorities of restructuring state assets to be:

"4.3.1.1 Enhance sustainable growth and development and employment creation
4.3.1.2 Increase the rate of development of infrastructure to meet basic needs and strengthen our economic potential;
4.3.3 Promote the development of our human resources"

The Resolution then goes on to say:

"4.3.2 Within the overall RDP and industrial strategy the restructuring of state assets will be effected through the development of sectoral strategies followed by the specific case by case consideration of the individual state enterprises within the context of that sectoral strategy."

In the Transport sector, specifically, the RDP of 1994 called for an "effective publicly-owned passenger transport system" to be "developed integrating road, rail and air transportation". (2.9.3). It envisaged extending rail services to under-serviced rural areas, for instance.

In our 1999 ANC Election Manifesto we say the following on transport:

"The ANC will develop and promote an integrated public transport system..." and " We will build and rehabilitate public transport infrastructure."

No doubt these objectives will be very difficult to achieve

However, throughout the last three-year period mixed signals, and conflicting agendas resulting in suspicions and confusion have dogged the restructuring process.

Some of this has had to do with an unflagging private sector and media offensive. The media persists in equating "restructuring" with "privatisation", and even nominally left newspapers (like the Mail and Guardian) measure the success of Ministers on the degree to which they speed up privatisation.

But we cannot simply blame the media (or the private sector) for the conflicting signals. Leading management, not least management cadres drawn from our own ranks, have pursued an agenda that is completely contrary to all of the strategic perspectives briefly noted above. Consider the Business Day (1 July 1999) article by Sango Nstaluba, Transnet's Executive Director in Charge of Restructuring ("Transnet keeps an eye on its vision"). The article promises to deal with a Transnet vision, and readers will be forgiven for anticipating at least some mention of the challenges facing South Africa's (and Southern Africa's) transport infrastructure; some vision perhaps of a restructuring Transnet's role in public transport. Or failing that, perhaps at least, some sense of the role of Transnet in meeting economic strategic objectives - even, if nothing else, its role in building an export-oriented growth strategy.

Sadly, but tellingly, Ntsaluba contrives to write an article on Transnet's vision in which the word "transport" is never used once, let alone the words "public transport", still less "RDP", or "development", or the social deficit left by apartheid in the transport sector. For Nstabula the "key fundamentals" of his vision are "getting the financial aspects right"; so that we are able to "ensure the possibility of the future success of the privatised entities"; and at the same time "putting in place sustainable solutions for black economic empowerment".

When absolutely key parastatal functionaries are so radically out of line with strategic vision and mandates of the ANC-led movement and government, it is simply not possible to assess whether the current threatened Spoornet job losses are the tragic but inevitable consequence of a necessary process, or not.

Among the issues that must be pursued are:

We must welcome cde Jeff Radebe's referral of any restructuring of Transnet to the forthcoming NFA Transport Sector Committee meeting this month.

The strategic perspective clearly articulated by cde Radebe must guide restructuring: "Transnet provides an important strategic service to the economy of SA and indeed of the region as a whole. The maritime environment, the various road and air transport systems provide the arteries and veins that feed our sub-continent. Furthermore, employees of Transnet are the breadwinners of families and dependants that number many hundreds and thousands of people." (The statement, correctly, adds that this does not mean that urgent measures can be delayed, or that money can simply be squandered).

The management of Transnet, and other parastatals, must be brought under much more effective political supervision. They are acting as managers and owners, when in fact government is the principal (and often only) shareholder.

Spoornet last year returned a healthy profit, its present losses are linked, partly, to pension fund obligations, and partly to deregulation in the transport sector, which has made privately operated road haulers more competitive than rail transport. But the private road haulers' apparent greater competitiveness disguises the fact that it is the public sector that is largely bearing the cost for wear and tear to our road network, while in the case of rail-line maintenance the cost falls on Spoornet.

Deregulation has been pursued haphazardly and independently of any overall strategic framework, and as if it were an uncomplicated good in itself. Deregulation, moreover, was implemented at a time when a key parastatal, Transnet was encumbered by billions of rands of cynically run-down pension fund obligations. Spoornet/Transnet have been made to "compete" with their hands tied behind their backs, as if there was a level playing field. Current losses are being held up as "evidence" of the non-competitiveness of the public sector! This whole area has to be re-evaluated as a matter of urgency.

Implement the Jobs Summit Resolutions -and especially the resolution of sectoral summits

In all that we have said above, it is clear that, whether it be gold-mining or transport, a key problem is that major decisions are being made, including mass retrenchments, in which there are not clear, commonly shared, strategic perspectives for key sectors.

The existence of a Gold Crisis Committee, which has now been reinvigorated in the immediate context of the ERPM and gold-sale events, is an important asset. It needs to be used to deal with immediate crises, but it must also be broadened into a forum capable of developing a shared tri-lateral strategic vision and programme for the industry.

The Job Summit resolution calling for sectoral summits must be implemented, not least in the transport sector. Such summits must turn the jobs crisis in transport and other sectors into an opportunity to develop much more coherent transport strategic policy.

Labour market transformation

The lie that South Africa has an inflexible labour market, said to be responsible for our high unemployment levels, has been repeated so many times by capitalist bosses and media, including the opposition parties that in the public media discourse it is treated as if it were true. As is the case in all capitalist societies, the responsibility for the malaise and crisis of capitalism is always placed at the door of the very same people ravaged by the crisis. In particular such blame is placed on organised workers. In South Africa this blame is also extended to the democratic government because of the measures taken to transform South Africa's labour market from one based on cheap labour to that based on equity and redress.

What are the realities of South Africa's labour market? Firstly, in a country with such huge social and wage disparities, there is no statutory minimum wage in any sector of the South African economy. Minimum wages, where these exist, have instead been won through bitter struggles and sacrifices by workers themselves. Secondly, there is widespread poverty among employed workers in this country as a result of generally low wages and under-employment, including the tendency to turn permanent jobs into casual and contract labour. For example in the commercial sector, a quarter of full-time workers earn an average of R110.25 per week. In addition a third of all retail workers earn less than the minimum living level for an average African family. This alone dismisses the argument that workers are a labour aristocracy. The recently released ILO report on the South African labour market states that: "When compared to other middle income countries labour regulations on dismissal, fixed-term contracts and working conditions do not appear to be particularly onerous, thus dismissing the view that inflexible labour markets are at the heart of the unemployment problem".

The most important reality about South Africa's labour market is that it still largely reflects the labour market regime of the apartheid order, characterised by sharp racial, gender and class inequalities. These are reflected, amongst other things, by the yawning, and perhaps increasing, wage-gap between highest paid and lowest paid workers. Again, in the commercial sector the wage gap between the top and bottom 10% of employees is 1:19.

Another feature of South Africa's labour market is "two-tierism". Whilst there have been major and impressive reforms in the labour market, at the same time there are massive retrenchments taking place in all key sectors of the South African economy, in addition to the rapid process of casualisation and contracting out. These processes are taking place below and beyond the reach of these newly entrenched labour rights. The struggle for labour market transformation should, in fact, largely be directed towards eliminating poverty wages, the apartheid wage gap and a two-tier labour market system. These are the areas that the SACP should focus its attention and energies in the coming months and years.

The absurdity of the unsubstantiated claims of a rigid labour market further lie in that these retrenchments are directly blamed on the demands of organised workers. The bosses retrench but then blame those who are victims of the very same retrenchments! In fact behind this ideological offensive and collusion between the elements of the old apartheid white ruling bloc, lies a bigger political agenda - to permanently secure South Africa as a capitalist country by launching a massive assault on organised workers. It is an offensive aimed at rolling back the thrust of the democratic government towards the transformation of the labour market to overcome the legacies of racial and gender discrimination. It is part of a larger class warfare aimed at building some kind of a seemingly non-racial capitalist order, legitimated by a democratic government, but built on some of the foundations of cheap labour and on the carcass of a dead labour movement.

When one examines closely the criticisms directed at the labour laws, it is laws aimed at dismantling the apartheid labour regime that are under attack, like the Basic Condition of Employment and the Employment Equity Acts. Therefore a flexible labour market is a cover for the continuation of some of the core features of a racial and gender division of labour, which can only be tinkered with in so far as it gives a semblance of a non-racial capitalist order. In short the agenda is for the majority of our people to enjoy only the political vote but in a "rightless" economic dispensation.

As we are meeting in this Central Committee, it is against the background of what are perhaps unprecedented levels of retrenchments in the recent history of our country. The scale of these retrenchments is only equaled by the intensity of the attack on the organised workers by the media and the bosses. Unfortunately some of us unwittingly reinforce these attacks by claiming that organised workers are acting only in their own "narrow" interests.

For the SACP what this offensive points to is that one of the major arenas of struggle will be deepened capitalist attacks on worker rights and intensified retrenchments. The struggle to defend existing jobs should be an integral part of the struggle for job creation. This is in fact one of the most immediate struggles that the SACP should throw its full weight behind. This Central Committee needs to endorse support for workers' current struggles to defend jobs and it needs to instruct all our provinces to engage with COSATU and join in their campaigns. As a Communist Party we cannot stand on the sidelines and watch this unprecedented attack on workers.

However, what is important for us is that when we support workers' struggles of this nature this must be accompanied by an attempt to simultaneously seek solutions and bring to bear strategic perspectives into the issues at hand. Principally our campaigns should be firmly located within the framework of our strategic approach to governance and transformation as outlined above. In relation to jobs in particular, our actions should be located within the following strategic objectives and considerations:

  • That there can be no job creation without serious attention to job retention
  • That these struggles must be part of the thrust towards the speedier implementation of the Job Summit resolutions
  • That a longer-term solution to our unemployment problems should be located in the development of an active and coherent industrial strategy, driven by an active developmental state

Restructuring of Government Employees' Pension Fund (GEPF)

The SACP has been involved with this matter for some time, and our 10th Congress passed a resolution on it. The GEPF accounts for the largest part of the government debt, and much of government's debt service obligations. Annual contributions by government to the fund are several billion Rand. A restructuring of the GEPF could release large sums of money that could be used for other purposes.

The GEPF operates at present on a "partly funded" system. There is a fund that partly covers all pension obligations of government to its employees. In the 1980s, the apartheid government raided the public service pension funds (to pay for war, oppression and other current expenditure), without encountering much resistance from the mainly white public servants at the time. By 1985, coverage fell to only 32% of its obligations - less than required to pay current pensions. Pensioners did not lose out, however - they were paid out of current government revenue. In the early 1990s, with an ANC-led government in the offing, the old regime altered course, and began rapidly rebuilding the funds - presumably to reassure white public servants who feared a new government would not honour pension payments.

As a result, the percentage coverage of the fund has soared from 32% in 1985 to 71,7% in 1996. According to figures in the 1995 Report of the Smith Committee on Pensions, a 71% coverage is sufficient to meet all current pension requirements, and the hypothetical contingency in which all employees aged 45 years of age and over immediately left the public service.

Should we restructure the GEPF, and how?

Pay As You Go (PAYG)

Some progressive NGOs (including some religious formations) have been calling for a Pay As You Go (PAG) system - this used to exist in South Africa, and is currently in operation in several countries. At our 10th Congress, the SACP also supported such an approach. Under a PAYG system, government simply pays pensions from current expenditure, without maintaining any fund. In SA the Smith Committee Report estimated that a move to a PAYG approach would have reduced the budget deficit in 1994 from 6,4% of GDP to 2,9%.

While government has not reached a final position on the GEPF, it is clear that it is not receptive to a PAYG approach, because:

The funds are not just government's to dispose of. They are managed by structures agreed to at the public service bargaining chamber, and it is not self-evident that all monies released would pass to government;

Abolishing the funds would amount to transferring savings to current expenditure; the obligations will still arise in the future, and might then be a large burden on the fiscus.

In addition, there also appears to be a view in parts of government that we should move from:

A "defined benefit" to a "defined contribution" system

Under the present ("defined benefit") system, government effectively underwrites the value of future pensions. Under a "defined contribution" system, the individual employee and the employer make defined contributions each month, and it is then up to fund managers how the funds are used, and what the employee eventually gets as a pension. The latter approach, by definition, requires a fund.

Flexibility within the present Partially Funded Approach

Since our 10th Congress, together with our alliance partners, we have begun to explore intermediate positions between a PAYG and a fully-funded approach. (Our Congress resolution supporting a PAYG approach was not motivated by a principled preference for one or another system, but by the deeply felt imperative of finding ways to release funds to accelerate transformation.)

The GEPF is now funded at over 70% (way beyond any feasible contingency), and this raises the question of possibly slowing down significantly the rate of contribution by government - even within the framework of a move to a "defined contribution" approach. In the 1999/2000 budget, government reduced its contribution from 17% to 15%, saving the fiscus R900 million. Some comrades in government, close to this process, believe we can go much further in making a substantial reduction in government's contribution, or even with a "contribution holiday" for government for a few years. This could release billions of Rands.

The Alliance process so far

The Alliance Summit held in October 1998 agreed that there was a need for "a fresh look at the funding of the Civil Service Pension Fund". A specific question posed by the Summit was: "Do we need to advance rapidly and inexorably to the fully funded option, or can we sustain the funding at its present partially funded levels?" An Alliance mandated task team was established to look at options.

The team was constituted earlier this year. It has held a number of meetings, and received briefings from officials. But a serious answer to the questions posed by the Alliance Summit cannot be given without engaging with specific detailed empirical information and actuarial calculations on the current state of funds. The task team has been unable to complete its work because it has been told that such data must first be processed within government.

The task team has not met for some months. Given the continued importance of this issue it is critical that the Alliance Summit at the end of July receives a full report from the team, and that work is revived and expedited.

Public Sector Wage Bargaining and transformation of the state

This year's public sector wage bargaining has moved into dispute, with the unions walking out of the bargaining chamber. Government has put R3 billion on the table, arguing that this is the amount approved by parliament. The unions have argued that the amount is not sufficient to cover inflation, and also take into account the need for delayed progression in the teaching sector.

While the SACP has had some partial role in background facilitation of negotiations to resolve this impasse, it would be entirely improper for the Party to take a stand on the immediate wage issue. Government and the unions must negotiate.

However, it is important for the SACP to discuss some of the structural problems and dilemmas underpinning the present complication:

The unions have argued that "government is negotiating in bad faith", on the grounds that it is impossible to have meaningful negotiations when the R3 billion first offer of the employer (in this case government) is also the final offer. Government's position is that public sector expenses have to be approved in advance by parliament in a transparent budgetary process. Clearly there is at least some merit in both perspectives.

We also need to understand that if the COSATU public sector affiliates do not engage in a determined and relatively robust negotiation process, the Fedusas and other unions at the shop-floor level will outflank them.

In practice, government last year was not able to hold the line on its budgeted first-offer. Once there are signs of some flexibility, some "scraping of the barrel", it is natural that unions will want to explore, by using strength, just how much can be scraped from the barrel.

Against this background, the SACP needs to help contribute to a broader, strategic programme, rather than become embroiled in the cross-fire of the present wage dispute. Such a broader strategic process should address:

The process of wage negotiation and settlement in the public sector - the present arrangements are a recipe for deadlock;

This discussion must be connected to the broader vision and programme of restructuring of the public service in the context of our strategic vision of a developmental state.

The SACP should ensure that the Alliance Task Group on State Transformation is revitalised, and that some of the issues touched on above become one of the Task Group's major areas of focus.

Building co-operatives as a concrete expression of building people's power in the economy

All the Tripartite Alliance partners have a programmatic commitment to building co-operatives. The SACP 10th Party Congress adopted a Programme of Action which asserts the imperative of building co-operatives. COSATU's September Commission has also called for the development of a social and economic sector in which co-operatives predominate. The last Alliance Summit in 1998 adopted Unity in Action programme which placed co-operatives on the political agenda of the Alliance. A commitment to co-operatives also found expression in the Presidential Jobs Summit in the final Declaration. The ANC's manifesto makes reference to co-operatives.

This commitment to co-operatives has been further reinforced in President Thabo Mbeki's state of the nation address of Parliament this year. On this matter he said:

"The Government will also place more emphasis on the development of a co-operative movement to combine the financial, labour and other resources among the masses of the people, rebuild our communities and engage the people in their own development through sustainable economic activity." (25/06/1999)

In addition this has been given further practical impetus by the establishment of a chief directorate on co-operatives by the Department of Trade and Industry, a move that the SACP warmly welcomes.

The question of the development of co-operatives should be taken as one of the key strategic objectives of the SACP and indeed the Alliance as whole during this period. For us as the SACP a commitment to the development of a co-operative movement is of fundamental strategic importance in translating our slogan "Build People's Power, Build Socialism Now". It is a concrete programme that would enable us also to concretely develop an alternative mode of economic production and social co-operation. In particular the development of a co-operative movement would contribute towards shifting the conception and programmes around small, medium and micro enteprises away from focusing on individual entrepeneurial activity to collective community production.

This of course poses serious practical policy and organisational challenges inside and outside the state, but most importantly opens the way to develop co-operatives as a part of a broader coherent political strategy to ensure sustainability.

In our concrete economic conditions in South Africa, the co-operatives have an important role to play in fighting unemployment and poverty, but within the context of developing alternative forms of empowering communities and our people as a whole. In this context local communities, trade unions, local and provincial governments are best placed to utilise co-ops as part of a sustainable economic development strategy.

Southern African Regional Integration

An important issue that has to be factored into our strategic and policy considerations is the question of regional integration in the SADC region. Our internal political economy is integrally linked to the regional and global political economy. We will have to systematically and consistently refine and sharpen our analysis and understanding of this area.

The SACP and the Alliance as a whole have long supported equitable and mutually beneficial reconstruction in the Southern African region. From a South African standpoint, the region has repeatedly been declared to be our top priority. SADC countries have historically been, and remain, our largest export market, particularly for manufactured goods, and it is widely recognised that the promotion of growth and development in South Africa depends on restructuring the historical patterns of domination and unevenness between ourselves and our neighbours.

An important aspect of the programme of the regional co-operation and integration, to which our country has been committed to since 1994, is the restructuring of trade relations. South African exports to the region have increased significantly since the early 1990's, while imports from the region have remained flat. In 1996, SADC adopted a Protocol on Trade, which called for a process of negotiation to establish a Free Trade area in the SADC region within eight years.

The South African government position is that the negotiations must result in an agreement that is asymmetrical in favour of the smaller and weaker economies. This means South Africa making more extensive tariff reductions over a shorter time period than it demands of its partners. In particular, the offer from South Africa (and its partners in the Southern African Customs Union) proposes removing duties on 88% of imports from the rest of SADC over five years, with special protocols involving tariff concessions on other products linked to common understanding on industrial policy.

The SACP supports a generous trade offer to our SADC partners. The present pattern of unbalanced trade with our partners is not only inequitable, but also unsustainable in the longer run. In so far as tariffs are a factor (and they are in our view not the only, even the most important, causal factor) they need to be addressed.

At the same time the Party will want to used its influence to encourage a process that is most beneficial to working people and the poor throughout the region.

In the first place, we are strongly of the view that the approach to regional integration in Southern Africa must be rooted in the perspective, to which SADC has committed itself in principle but which has not always been evident in practice, of development integration. This means recognising and acknowledging, on the one hand, that there are unevenness and imbalance in regional relations, and that special measures are therefore needed to counter tendencies towards polarisation and to redistribute benefits to the weaker and smaller partners. It also means however, recognising that a regional programme cannot be exclusively, or even principally, about trade liberalisation. In an underdeveloped region like ours, many of the most important barriers to regional integration are not tariffs and other regulatory barriers - but underdeveloped production structures and inadequate infrastructure. The development integration approach requires co-operation to address these issues, including working together on infrastructural programmes and generating regional industrial and sectoral policies. This is all the more important for South Africa to develop an industrial policy that will articulate as well as reinforce, and be reinforced, by a regional industrial strategy.

A SADC trade agreement must not, therefore, in our view become reduced to a mechanism to encourage further tariff liberalisation in the region towards the world in general. Rather it must become a spur to the re-invigoration of SADC's faltering programme of sectoral co-operation, and to the development of a SADC industrial strategy.

Second, while we accept and support a process in which a SADC trade agreement encourages a re-location of certain industries elsewhere in the region, it must not become a "back-door" for the entry of imports from outside the region that threaten jobs in South Africa. A trade agreement must therefore prescribe clear "rules of origin" and result in closer cooperation between customs authorities to ensure that there is no abuse.

Third, a SADC trade agreement must, in our view recognise and reinforce efforts to promote cooperation among workers' organisations and basic rights of workers in the region. In the early 1990's, the Southern African Trade Union Coordination Conference (including COSATU) adopted a "Draft Social Charter of Fundamental Rights of Workers in Southern Africa". This included calls for the recognition of basic human rights and the right to organise and engage in industrial action, recognition of basic ILO conventions, prohibition of all forms of discrimination and the upward harmonisation of basic conditions of employment throughout the region. The SACP believes that it is important that steps are taken to ensure that a SADC trade agreement becomes part of a process of upward harmonisation, rather than a race to the bottom over labour conditions. This emphasis is of absolute importance given the neo-liberal prescriptions - particularly for developing countries - that demand a weak labour movements and erosion of workers' rights as a precondition to development.

To achieve the above objectives it is going to be important that the Alliance harmonises its relations with other progressive forces in the region. This calls for, amongst other things, the convening of an Alliance summit on relations with other progressive forces in the region. This is an issue that all Alliance partners are committed to. In addition it is important that the SACP deepens and expand relations with left forces in the region as a basis through which we strengthen our perspectives and approaches to regional integration that will benefit the working people and the poor in the region.

Lessons from the Public Service Wage Dispute

The authors, David Makhura and Tebogo Phadu, are SACP activists who are involved in current public sector transformation processes and debates in their capacity as trade unionists in NEHAWU. However, this paper does not necessarily represent the official position of either the SACP or NEHAWU

The current wage dispute between the government and public service unions has raised important issues for debate regarding transformation of the state machinery. For us, the very manner in which we conduct this debate is important in engendering a culture of open and frank ideological engagement among Party activists in all spheres of society. Disagreements in debates should not lead to a state of mutual ostracism. But rather such disagreements should help us influence one another on the details of the type of transformation agenda we are pursuing in our different spheres of operation. It is therefore incorrect for us as communists in particular and activists of the movement in general, to be in the habit of resorting to cheap and unsubstantiated labeling. In this particular debate, labels such as "neo-liberal", "trade union narrow-mindedness" and "economism" have been loosely used. We know that the issues we are facing cannot simply be resolved by throwing these labels at each other, however self-gratifying the labeling exercise may be. By so doing, we end up closing or limiting the debate to few individuals rather than opening it up to the broader movement and party activists.

In this paper, we seek raise issues around transformation of the state machinery that will help trigger a wider debate that should not just be a debate between comrades in the public sector unions and those in government.

This paper argues that the current public service wage dispute and the issues around it should be examined in the context of the on-going, contested process of social transformation. In fact, the key question around how to resolve the dispute should be: what are the long-term implications of the positions of the parties to the dispute on social transformation? Once we look at this question, we shall realise that the dispute and the disagreements around it are not just a "quibble over percentage increases". Nor are they simply an "employer and employee relationship that has gone terribly wrong". While these two issues are manifestations of differences in approach to transformation, they have been presented publicly as if they are the main issues. Those who have always seen collective bargaining in the public service as a terrain to advance state transformation cannot be cajoled into believing that this is either difference over percentages or an employer/employee relationship breakdown.

State Transformation - Are there competing schools of thought?

Firstly, it is important to proceed from the premise that the transformation of the state is a central part of the Alliance's agenda to transform our society in its entirety. In defining our vision and choosing the means to pursue this goal, differences between Alliance partners and within these structures themselves have always arisen both at the level of policy as well as principles underlying certain policy choices. One key and persisting difference relates to macro-economic policy, and it is precisely government's macro-economic framework policy (GEAR) that drives the government's approach to public service bargaining and the transformation process in general. While there has been a significant convergence in the October 1998 Alliance Summit on macro-economic policy issues, GEAR's assumptions and fiscal targets continue to constitute a basis on which the government pursues its bargaining and transformation agenda. On the other hand, Cosatu public sector unions have refused to accept that GEAR's assumptions should set the terms for transformation of the administrative machinery of the state. These differences on macro-economic policy have expressed themselves at different times on different issues during the process of transformation.

Secondly, there are also competing schools of thought on how to organise the administration of state and delivery public services. It is important to note that there is agreement in the Alliance about the need for a national democratic state that is developmental and biased towards the motive forces of the national democratic revolution. But in terms how to organise and run the public service, there are signs of tension between a "corporate" versus a "developmental" model of the organisation of state administration and the delivery of public services. On the one hand, there are forces that are pushing for a "corporate public service" which is primarily aimed at running the public service as if it were a private business corporation that operates within the logic of the "free market". Within this model, a set of policies such as privatisation, outsourcing, retrenchments are pursued with the objective of having a "lean and mean state" that is more friendly to multinational corporations and tougher on workers and communities. On the other hand, there are those who are resisting this drive by advocating for an alternative "developmental model" of public service, organised and run along the principles of optimal utilisation of public resources to realise quality service delivery. Within this model, both workers (as people who deliver the services) and communities (as people to whom services are delivered) are seen as partners of the democratic state. This tension on the kind of public administration we require is now turning into an open and fierce contestation, as public service restructuring becomes different things to different people.

Thirdly, through this dispute, the Alliance has itself come under the spotlight.The issue is not so much about what the prophets of doom describe as the"marriage showing some strains". For us, the dispute highlights a serious lack of political mechanisms of engagement within the Alliance in the implementation of our agenda for transforming the state. This process has been left to the government technocrats and union negotiators, as the work done by Alliance task teams in 1998 is not at all being considered in the current processes of transforming state administration. There remains inconsistency and shortcomings (inside the Alliance) on our understanding of a developmental state and related questions of its size, how services are to be delivered, and the role of public sector workers in shaping a developmental state, to name a few. The Alliance has so far been good at developing a broad framework on the developmental and democratic state. But the lack of detail on this question has left unions and government to pursue many contradictory policies in the seductive name of building a "developmental state". The cutbacks in the wage fund and in the number of workers is based on an ideological belief in the "lean state", rather than a pursuit of a scientifically determined optimal utilisation of personnel and finances.

Downsizing is becoming a new buzzword for state managers. These are issues that are likely to influence the outcomes of the Service Delivery and Skills Audit Report, which is supposed to provide a scientific picture of the staffing levels needed to match social delivery requirements. Precisely because of the dispute and its frustrating outcomes for both parties to the dispute, there may be a strong feeling on both sides in favour of not involving the Alliance in matters of state transformation in future. We argue that we need more and well-conceived strategic involvement of the Alliance, not in the bargaining process, but in the detailed elaboration of public sector transformation. This should include discussions on issues such as the size and type of state, strategic utilisation of state resources, organisation of state administration and delivery of social services, remuneration policy, etc.

Let us debate the issues - why wild accusations?

1. Living wage, social wage and transformation

Is the living wage campaign an erosion of social service delivery? We argue that the struggle for a living wage is an integral part of the vast national transformation process. When debating the living wage, it is important to remember that the institutionalisation of wage discrimination by apartheid and the resultant turning of blacks into cheap labour by racial capitalism in our country has left us with a terrible legacy as one of the most unequal societies in the world. Black workers, particularly African and women workers, have for many years been paid wages that are not commensurate with meeting the high costs of living. The majority of workers cannot meet the cultural and socio-economic necessities of the level of development at which our society is. Their wages cannot match the prices of some of the necessary goods and services they need. This is why Cosatu and its predecessors have campaigned for a living wage and will continue to do so. This situation is complicated by the fact that black people have had no adequate and equal access to a social wage i.e. social services such as healthcare, education, social security, public transport, housing, water and sanitation, energy, etc. While some of the components of the social wage are now being tackled by the democratic state, it is important to note that the social wage deficit will remain with us for quite some time. In a situation where the social wage is either limited or non-existent, the living wage becomes a means with which workers support not only their families, but the indigent communities from which they come. We are raising the context in which a living wage is defined and its relationship with the social wage so as to caution against anyone rushing to declare that public servants are earning a living wage. Instead of unilaterally declaring the "living wage" and pushing it down the throats of workers, we need to open a debate on the appropriate living wage for South African workers today.

Our perspective is, therefore, against unilaterally imposed wage restraint (or wage repression) as a means to achieve what is alleged to be "broader transformational goals", which is in reality a pursuit of "growth through wage restraint". A living wage campaign (which includes narrowing of the wage gap) taken together with Cosatu's programme on achieving the social wage, cannot be branded as economism. Our perspective seeks to preserve the powerful dialectic of the "economic and political". This is in the true tradition of the South African progressive labour movement. It is also a dialectic that is embodied in the current, but under-theorised concept of "transformative unionism", which grapples with the role of organised workers as a key component of the working class. In the public sector, transformative unionism combines effective representation of workers with a political determination to build an efficient and developmental state administration.

The struggle for a living wage in the public sector is not an activity by "economistic circles" or by "narrow minded public servants". They are not disruptive actions by misguided workers but an integral part of this vast, on-going and contested transformation process in South Africa. Transformation is not undermined but enriched. Yet it is also a manifestation of growing organised working class militancy in the face of the squeezing of wages, a job-loss bloodbath, privatisation, commodification of basic services and other factors that have risen in our new democracy.

To fight for a living wage and the narrowing of the wage gap, which are themselves under attack by those who want to impose a wage freeze on lower level and middle layers, while seeking to increase pay and benefits for higher echelons of the public service in the name of attracting skilled personnel, is a fight against the bourgeoisification of the public service. It is a challenge to the attempt to re-introduce private sector-type income inequality, and not "craft narrow-mindedness" on the part of Cosatu public sector unions, but a broader goal of equitable distribution of income. It therefore cannot be postponed to some undefined time. Nor can we allow a new remuneration policy to undermine this important principle. It is one of the important struggles, at the present moment, which connects the concerns of the organised, the unemployed and the marginalised. The current situation is one where the working class is experiencing the rise in cost of social services - transport, water, electricity and so on - as a result of processes of extreme commodification of these services. The working class is having very little access to an adequate social wage. Because of this, workers' wages provide an important "unofficial social security net" to millions of unemployed, these wages supplement the income of family members engaged in precarious forms of work - self-employment, part-time jobs, and so on. This could range between 5-6 million people relying on public sector wages.

Public sector wages are even more important in poorer provinces like Eastern Cape and Northern Province, where 17% and 21% of workers, respectively, are public servants. Currently towns like Bisho and Umtata are becoming ghost towns, as their local economies are experiencing declining buying power, leading to closure of shopping malls, and local businesses. At the same time, the current situation is one of massive job-losses, affecting all sectors of the economy, including the public sector, contributing further to the destruction of the standard of living of the working class. However, by emphasising the political importance of a living wage in the transformation, we are not arguing that it is only through a living wage that the attack on the working class will be countered. It is the through the "interlocking elements of the RDP, in particular the promotion of collective bargaining, minimum wage regulation, affirmative action, education and training, technological development, and provision of [subsidised] social services and social security, that we can achieve a living wage for rural and urban workers and reduce wage differentials" (RDP 4.8.5.).

We are raising all these issues not because we think the ANC government is having any intenions of undermining the rights of workers. We simply do this to point out that the whole process of social transformation and concepts such as "democratic and developmental state" are severely contested by powerful forces of national and global capital. This, of course, will require more debates on the appropriate macro-economic framework needed to achieve these goals. They require what others call " a post GEAR consensus" in the Alliance. The living wage struggle is only one part of a broader struggle in which transformative public sector unions are engaged. It is therefore important to understand the connection of the living wage struggle with other struggles we are engaged in, such as the struggle for a social wage -i.e. an affordable public transport system, a guaranteed income for the unemployed (or Basic Income Grant), the struggle for free or subsidised social services (water, electricity, education), for job retention and job creation and so on. These are struggles that can be effectively woven together by the party of the working class, the SACP, which has the capacity to provide socialist leadership to these struggles.

Personnel spending "crowding out" social spending?

In the last two months, enough publicity has been given to the amount of money spent by the government on personnel. This was done as part of a general review of government expenditure through wide publicity given to the DoF's Intergovernmental Fiscal Review (IGFR). The IGFR itself is a very important piece of work as it contains useful data and information on how the government is planning and managing public finances. Under apartheid, this was a seriously guarded secret. Transparency, accountability and the setting up of tight financial systems will go a long way in stamping out corruption and mismanagement of public finances. This will help ensure that the issue of optimal allocation of financial, personnel, material and other resources is itself a matter for a wider public debate. For this reason, we commend the Department of Finance work on the IGFR.

However, the IGFR reveals the underlying philosophical assumptions informing the DoF's approach to the management of public finances: success is measured in terms of cost efficiency and how much surpluses provinces build. Provinces are thus congratulated not for meeting service delivery targets with limited resources, but for having surpluses even if this is at the great expense of service delivery. Provinces with social deficits e.g. collapsing healthcare and education, will not earn the wreath of DoF if they have "turned around" their previous budget deficits into surpluses. This is definitely a serious political problem because we need to measure government's financial performance in terms of how we meet RDP objectives not abstract financial figures.

In line with this approach, the IGFR data is used to pursue GEAR targets. It now becomes a principle to public spending in pursuit of targets set in GEAR. In order to achieve these targets, a combination of measures will be taken. Some of the measures include massive retrenchments and imposing a wage freeze on public servants. All these issues and intentions of government have become clear in the recent public speeches, newspapers and reports. The Department of Finance (DoF) has been working very hard in the past five years to win the "business" argument that the state needs to spend more money on building clinics and schools (capital spending) even though service delivery requirements dictate otherwise.

The argument says that a wage restraint coupled with downsizing of the public service will "free up resources" for capital expenditure. Hence the talk about a "trade-off" between personnel and capital expenditure, regardless of the service delivery requirements and the labour-intensive nature of public services such as education and healthcare. This corporate conception of the delivery of social services will cause many problems as we move to a situation wherein the public service is being designed, organised and managed in the same manner that a private corporation is run and managed. The public service itself is increasingly becoming a "marketplace".

Having identified "rocketing" personnel spending as a soft target, particularly during the public servants' strike, there is an absence of a principled and consistent defence of the factors that account for a rise in personnel spending in the past five years. In the past five years the ANC-led government has done very well in taking up measures to close the wage gap, introduce pay parity and extension of benefits to workers who have been denied this aspect of the social wage by the apartheid regime. This necessary step of the ANC government's transformation agenda has led to a situation wherein personnel expenditure has risen to about 52%. This was happening at time when overall budgets were being squeezed below inflation as part of meeting GEAR's deficit targets. Now to turn around and blame this on the necessary reform of the public service labour market when you know that the budget should have grown in line with inflation is to question the necessity for transformation. If service delivery requires that we be flexible on deficit targets, we need to do so rather target what seems to be easy targets, whereas the socio- economic consequences may be devastating on poor and working class communities.

In arguing against an ideologically-driven attack on personnel spending led by the DoF, we are not arguing that spending on staff should outstrip spending on the very services that staff should deliver. It is good public management to ensure that you can't employ nurses, doctors, teachers and police when there are no resources to buy medicines, textbooks and patrol vehicles, let alone when there is no money to build clinics and schools. So, in the overall public expenditure control of spending on human resources, both wages and training, will have to be seen as part and parcel of maintaining an acceptable standard of service delivery. It cannot and must not be pitted against infrastructure development. An ideologically-driven formula of looking at personnel as a liability is problematic. Control of spending on personnel should be done with the aim of optimal utilisation of material, physical, financial and human resources at the state's disposal to meet adequate service delivery standards. When it is used to meet abstract personnel versus capital expenditure ratios and budget deficit targets. We therefore cannot and must not worship the fact that overall budgets have been falling year-to-year, as if this paradigm is itself holy and cannot be challenged. We must contest and win the space for the argument that the overall budget should grow in line with the commitments we made for accelerating service delivery.

The issues on what the appropriate levels of spending on personnel and infrastructure in each province should debated in the Alliance and decided on the basis of scientifically determined service delivery needs. If these issues are left are not widely discussed, the temptation to use corporate stereotypes such as seeing people in an organisation as a liability rather than as a resource, is very great. As Minister Geraldine Fraser-Moleketi puts it " personnel expenditure could only be reduced through downsizing, whether through retrenchment or attrition or by holding down salaries below inflation" (Mayibuye, September 1999).

Although there were about 110 000 workers downsized (in the last three years), mainly through voluntary severance and natural attrition, the push for "state-initiated retrenchments" on a massive scale seems to be on the agenda. As a result of fiscal austerity measures, there is pressure on provinces and departments to downsize by retrenching lower level public servants, thus creating a space to outsource and privatise the delivery of public services. Backlogs in personnel remain significant in many areas of social services such as health, education, police, environment and so on. Some studies indicate that in areas such as primary health care for example, an additional 4000 staff may be needed for clinics that have been built. In education, some put the figure of 10 000 additional teachers.

Economism and trade union narrow-mindedness?

At the height of the public sector dispute, comrades in government began to re-read Lenin. This is quite good for all of us. The problem arises when we do so out of context. For instance, Lenin used the slogan "Better Fewer, But Better" in the context of calling for a tight vanguard political party in the conditions of underground struggle against Tsarism. Yet we have even heard some evoking this slogan to justify a managerialist downsizing in the public service in South Africa!

Is it true that there are tendencies of "trade union narrow-mindedness" and "economism' among Cosatu public sector unions? The problem with this charge is that it fails to locate Lenin's contribution to the question of economism in his time and place. For if we are to go to that context, we realise that even his contribution is of less significance to the issues surrounding the dispute and the kind of trade unionism we have developed in South Africa, particularly in the last 15 years.

Lenin, under extreme conditions of state repression of the early 1900s Russia wrote, (in "What is to be done") on the relationship between "economic struggle" and "political struggle". He argued that trade union struggles for better living standards and rights are not sufficient to overcome capitalism. He argued that trade union struggles in the factories on their own cannot bring about democratic communism. The working class, he stressed, needs a vanguard party of their own as well, so that their struggle can achieve high levels of class-consciousness and organisation and forge the dynamic relationship between economic struggle and political struggle. There was a very strong tendency in Russia, led by people like Martynov before the 1917 revolution, that argued that trade unions should concentrate their efforts and organisation on "economic exposures" (factory struggles) as opposed to focusing on "political exposures" (political struggles). Again in 1921, Lenin differed with Trotsky and Bukharin on the role of trade unions (see "Once Again On Trade Unions") as they argued that that trade unions are a "technical and administrative apparatus for organising production" as opposed to unions being seen as a "school for democracy (the South African tradition) and communism". Lenin characterised Martynov's views as economism and Trotsky and Bukharin's as syndicalism.

There are also different types of economism, the leftwing and the rightwing variant. Rightwing economists tend to subordinate political struggle and goals to the constraints of a given economic status quo, thus leading to a situation wherein revolutionary movements adopt very conservative economic policies in the name of "objective reality". In our particular situation, a pursuit of fiscal targets at all cost, the crunching of economic data and financial figures in planning processes should not make planners forget that behind the statistics are human beings who have social needs and aspirations that must be met. The Cuban revolutionary, Che Guevara was very combative against this type of Economism (see Carlos Tablada's Economics and Politics in the transition to socialism). Leftwing economists tend to believe that you transform society simply by building strong shop floor unions whose main aim is to "conduct the economic struggle against the bosses and the government" (Martynov), and hope that through these factory struggles alone they can bring about proletarian democracy and socialism. In this variant, organised workers see themselves as the only force capable of bringing about change. They do not necessarily fight alongside other sections of the working class outside the factories. Their methods of struggle are limited to legalism and open forms of organisation, even when this poses dangers to their own survival. Lenin's critique of this type of trade unionism was right in the context of the call to shift the struggle from the "economic exposures" to the political front where the working class party will take the lead in such struggles to overthrow an oppressive regime.

However, it is also important to point out that some of Lenin contributions on the role of trade unions and other mass formations were quite controversial if considered in today's context. For instance, he tended to see trade unions as "conveyor belts" to the party and Soviet state. While the context of a socialist state is significantly different from the one in which workers do not own the means production, we do not think it correct to characterise the relationship between the party and democratic mass organisations in this way. What happened in the Soviet Union during the period of "state socialism" bears many lessons for communists all over the world. Mass-based organisations have to be accountable to their membership in the first place, not to the state or party.

Now, those who know the history of the labour movement in South Africa will know that it has gone through this debate and process during its stage of historical development. There were many Martynovs in the labour movement at that time. As the national liberation struggle gained momentum, many Lenins emerged in the labour movement. At the time the debate was dubbed a debate between "workerism" and "populism". In the mid-1980s, the SACP made a decisive input into this debate, arguing that neither "workerism" (in South African conditions it was usually a variant of left-wing syndicalism economism), nor "populism" (a liquidation of the workers movement into a "class-blind" popular movement) was appropriate. We needed, the Party argued, to build strong, independent worker organisation, including trade unions, but those formations needed to be an integral part of a broader national liberation movement. The formation of Cosatu in 1985 was an important step forward in the building of independent, mass-based trade unions in the broader context of the struggles for democracy and socialism.

The dialectic of the economic and political struggle has been richly developed here in South Africa, where specific struggles at the shop-floor and community level were able, literally, to speak to each other so as to generate a general political character against the system of special colonial domination. Most of the issues through which various working class struggles could speak to each other (e.g. bad living and working conditions, lower wages, access to social wage) remain with us today, albeit in a new context and with new challenges and possibilities.

As we pointed out earlier, struggles for a living wage and the need to fight the apartheid wage gap cannot be confined to a narrow trade unionism, they must be integral to broader transformative struggles. The same can be said of struggles to transform the workplace, affirmative action, workplace democracy and effective collective bargaining structures, and worker empowerment. These are issues that pose great challenges to both the labour movement and the democratic movement as a whole. These struggles are not "dress rehearsals" for some future "real struggle". They are an integral part of consolidating democracy, achieving equity and building a better life for all. The gains made by workers in these struggles are not temporary gains that must be taken back from workers in the future in pursuit of undefined "broader transformation goals". Democrats and communists alike have to defend these gains, or workers will do it on their own even if it means contesting against their movement, party and state. This they did in Eastern Europe when their rights were taken away and when unions became "conveyor belts".

Cosatu unions working with reactionary staff associations against the democratic state?

One of the highlights of the public sector strike of 24th August, for example, was the massive participation, for the first time, by white workers and their staff associations. What was the basis of the "rainbow character" of the strike, and what implications does this have for progressive trade union organisation? Were white public sector workers simply joining in because the actions were against the democratic state whose progressive policies they oppose? Were Cosatu unions providing leadership to these staff associations?

The dawn of democracy in our country has impacted heavily on many white workers in the public service. The demise of apartheid has robbed them of state protection from labour market competition, secure lifetime employment, guaranteed annual increases and access to an often generous social wage - all privileges previously enjoyed purely because they were white. The progressive policies pursued by the ANC government, such as affirmative action and employment equity have brought a sense of insecurity among most white public servants. This has been demonstrated by some of the court actions taken by their staff associations to challenge progressive government policy. These unions have tendencies varying from economism and craft narrow-mindedness. They fit the description quite well.

The current issues on the wage cuts and future possible retrenchments have certainly made them more and more anxious. But the broader and growing sense of insecurity in a public sector, threatened by processes of privatisation and downsizing certainly knows no colour, although it will largely target workers at the lowest level, the majority of whom are African workers. In this context, what is required of activists of the movement and party in progressive trade unions? Should we be ashamed that we are marching side-by-side with workers belonging to reactionary staff associations? Should these workers be condemned for life and not be schooled in working class politics? Is greater non-racial unity of the South African working class more possible in the era of rampant globalisation? Is such unity not to the advantage of the democratic state and transformative unionism? These questions need to be answered with the seriousness and honesty they deserve.

We need to admit that the total membership of Cosatu unions in the public service still trails behind the combined membership of staff associations and independent unions, and this is a serious weakness. Our own numbers limit the extent to which we can chart the direction of change in the public service, independent of reactionary unions. The conditions of democracy in the past five years have led many workers to swell the ranks of our Cosatu affiliated NEHAWU, SADTU and POPCRU. We need to further exploit this situation to build bigger unions. Of course, we also need to be aware that growth brings more challenges. The key challenge for Cosatu unions is to ensure that they invest resources in ideological and organisational training of their members so that they play the necessary role expected from the organised proletariat. Membership growth without political and organisational capacity is a sheer chase of numbers.

We need also to admit that as Cosatu unions we did not provide coherent strategic leadership to the staff associations. This is so because we are not as strong politically and organisationally as we need to be. Even among the Cosatu affiliates in the public sector we have different organisational traditions and political experiences. We were not tactically coherent on how to engage staff associations, or on what tactical positions to adopt at certain periods when engaging government. Most of the time, we allowed too much space for staff associations at the expense of principle.

There are times, though not on major moments of the dispute, that we seemed to have allowed them too much leverage without us getting anything from them in terms of shifting their consciousness towards non-racial working class consciousness and solidarity. Achieving this will require a change of approach in engaging with these unions, including how we approach the PSCBC labour caucus. We cannot allow a situation wherein these unions dictate the terms and pace of how we must interact with the democratic state. Equally, we cannot behave as if we have no working class agenda to transform staff associations into genuine transformative trade unions. Yes, we should work with reactionary staff associations, but we do so not for its own sake. The aim is to win them over to the democratisation agenda in the short term, while in the long term we want a giant and transformative public sector union that can truly represent the aspirations of all workers in the public sector.

This is a union that would be a truly industrial union that would overcome the current situation in which staff associations are characterised by "craft narrow-mindedness" and occupational unionism. The challenge for public sector transformation: Transformative Unions and the Democratic State.

The current wage dispute and the heat it has sometimes generated must not make us forget that in the past five years, the ANC-led government has worked very well with Cosatu unions in bringing about significant transformation in the public service. As we have already acknowledged, our collective membership growth is very much a function of the conditions created by democratisation.The democratic state has gone a long way in narrowing the apartheid wage gap and improving the working conditions of particularly black public servants. Progressive legislation has ushered in many changes around labour relations in the public service. The achievement of centralised bargaining wherein wages and conditions are negotiated in the Public Service Co-ordinating Bargaining Council is one of the important victories for workers facilitated by the ANC government. The new policies, such as affirmative action and education and employment equity have significantly changed the face of public service management cadre. Other policies that are still statements of intent around public service education and training should be speedily implemented. Initiatives such as "Batho Pele" and the campaign against corruption are beginning to introduce the work ethic, a caring ethos and morality required of a public service cadre. All these important achievements are a result of collaborative work between the democratic state and transformative unions. These gains must be defended. Anything that seeks to undermine these gains, whether consciously or unconsciously, needs to be harshly criticised by both Cosatu unions and the democratic state.

Beyond the current wage dispute lie many challenges of public service transformation. We need a public service cadre capable of delivering quality social services in the most optimal way possible. But the key question now is how do we confront these challenges. There are questions of how transformative unions should relate to a democratic state in resolving some of the key policy issues that will be facing us in the near future.

The following are immediate issues that require a politically mature engagement:

  • The new wage policy cannot amount to wage moderation We should debate the idea that the democratic state should govern through wage moderation (that will include cuts in and total scrapping of some worker benefits). At the centre of this argument is that personnel spending is "crowding out" social delivery - something we have disputed in this paper.
  • Provinces must be involved in centralised bargaining in a way that does not lead to the undermining and ultimate

  • dismantling of the PSCBC. The application of the principle (reduction of the personnel spending) could only be applied through curtailment of workers capacity to bargain. Currently, DoF has raised arguments for decentralising the vote on conditions of service. For us, this will dismantle the Central Bargaining Council and proposed sectoral bargaining councils. Such a move could see fragmentation of collective bargaining and introduction of wage flexibility in the public service, wherein provinces and departments will determine how much workers are paid. The result could be that a nurse working in the public service will be paid differently from province to province. This is already the experience in countries like Australia and New Zealand where the same strategy was applied. The result is not development of a "strong trade union" but a weakened one as this will allow provincial and departmental managers, who are currently under severe financial pressure, to either apply wage repression or downsize on a massive scale.
  • Rightsizing is not the same as downsizing The pressure on departments and provinces to respond to fiscal pressures will have a serious implication on state transformation, as it leads to managers becoming more narrowly concerned (as they operate outside appropriate guidelines) about the size rather than fundamental question of the type of state we seek to build. Strategic considerations (for building a developmental state) will now be subordinated to fiscal pressures in the current processes around quick development of "management plans", and a social and skills audit. Comrades in NEHAWU estimate that this process could lead to 70% of their membership in the public service being downsized if the "lean and mean" public service argument wins the day. Public statements by the DPSA on downsizing have also not been helpful. Related to these issues are efforts to inculcate bourgeois managerialist values in the public service,in the name of performance and efficiency.
  • An appropriate macro-economic policy should seek to redress the social deficit. Above all, fixation with a policy that is increasingly showing its failure in many areas, with potential to reverse some of the social and worker rights gains, cannot proceed without serious reappraisal. During the dispute we have come to appreciate the importance of deepening the debate on an appropriate macro-economic framework, not its "adjustment".

The challenge for the Alliance

The thrust of our argument is that transformation of the state administrative machinery, i.e. the public service, is a task so serious that it cannot just be seen simply as a collective bargaining matter between the employer (state) and employees and their representative organisations (trade unions). To approach it this way will indeed constitute trade union "narrow-mindedness" as Lenin argued. While collective bargaining is an important collaborative mechanism for transformation, it will achieve limited results if it is not guided by a transformative agenda. This transformative agenda should be driven through a political process of the Alliance and be reinforced by tight bilateral processes between our comrades in government and the leadership of Cosatu public sector unions.

Clearly, if these issues, highlighted by the longest wage dispute in the history of workers' struggle in this country, are not properly addressed, particularly inside the alliance, we are likely to see a recurrence of such unfortunate tensions. What we do not need are conditions in which transformative unions are put on the defensive, while the democratic state is called upon by enemies of the working to "deal with unions". For those who believe in the power of political relationship-building, it is important for Cosatu unions and government leaders to begin a process of ensuring that we can confront future challenges of transformation as comrades not as rivals. None of us has a choice to go it alone.

The dispute has revealed serious weaknesses of the alliance in managing contradictions within its ranks, both at the organisational level and inside government. At the organisational level, is important that calls for a strong Alliance political centre, with capacity to address issues that are fundamental for policy-making, be considered. It is obvious that some tactical blunders have been made on both sides during the height of the dispute. A great degree of distrust is prevalent among comrades who belong to the same movement and Party. While differences are healthy, we are yet to learn from this dispute on how to use the Alliance and bilateral meetings effectively for managing such contradictions. Without such a centre, such contradictions could only feed into a right wing or ultra left agenda for "breaking the alliance". In this era of rampant neo-liberal global capital, it is only through strong mass organisation and mobilisation, under the leadership of the Alliance, acting in concert with a democratic state, that our national democratic transformation process can be accelerated in favour of the workers, the poor, and the rural masses.

Globalisation, African Economic Crisis and South African Vulnerabilities

Patrick Bond surveys the current African economic crisis and locates South Africa's own vulnerabilities in the broader context of continental and global challenges.

How can we best illustrate Africa's economic problems? The United Nations tells us that the average African household today consumes 20% less than it did 25 years ago. The decline of the continent is also reflected in the fact that for every $1 in an average US pocket, an average African in contrast earns just $0.06:

TABLE: GDP PER CAPITA AS A PERCENTAGE OF U.S.  

 Southern Europe Eastern EuropeLatin AmericaAsia (ex Japan)Africa
182064.5%58.3%55.5%42.1%35.0%
187042.2%41.9%32.6%23.3%19.5%
191333.0%29.3%28.6%13.3%10.8%
192931.2%22.8%27.9%11.4%9.6%
195021.2%27.2%27.3%6.7%8.3%
197336.3%34.6%28.6%6.9%7.7%
199236.0%20.4%24.3%11.0%5.8%

South Africa both wins and loses from Africa's economic woes. The country's transnational corporations (especially in commerce, mining, tourism and construction) and banks have unevenly but quite profitably penetrated the Southern African region. Local exporters have gained dramatically from growing post-apartheid trade imbalances with Africa. (Closely-related problems--regional wars, worsening migrant labour relations, growing arms traffic, geopolitical manoeuvering and other reflections of post-apartheid South African domination--are beyond the scope of this article.)

It is worth surfacing arguments about the African crisis in the African Communist, where in recent years some of South Africa's most refreshing anti-neoliberal sentiments have been aired. The context is most crucial in telling this sorry story, particularly the coincidence of intensified globalisation and South Africa's own vulnerabilities. There are few better statements of this context than the beginning of an Alliance document, "The Global Economic Crisis and its Implications for South Africa," issued last October:

The present crisis is, in fact, a global capitalist crisis, rooted in a classical crisis of overaccumulation and declining profitability. Declining profitability has been a general feature of the most developed economies over the last 25 years. It is precisely declining profitability in the most advanced economies that has spurred the last quarter of a century of intensified globalisation. These trends have resulted in the greatly increased dominance (and exponential growth in the sheer quantity) of speculative finance capital, ranging uncontrolled over the globe in pursuit of higher returns... As the depth and relative durability of the crisis have become apparent, the dominant economic paradigm (the neoliberal "Washington Consensus") has fallen into increasing disrepute.

Invited to provide an essay on the roots and symptoms of Africa's economic crisis, I want to offer not only descriptive analysis in this same spirit, but also to raise political concerns in order not to conclude with the standard litany of pity and frustration over the continent's rock-bottom living standards and power relations. For if current trends are terribly depressing, nevertheless I think that African political-economic relations can still be challenged through praxis by SACP members and African allies in a way that leads us from the current stage of rhetorical flourish to a higher one of strategic clarity and mass activism.

I argue below that militant, surgical activism against the ultimate enemy--the Washington Consensus (the ideology and institutional power of the International Monetary Fund, World Bank, White House, Federal Reserve, Treasury Department and cronies)--can unite an emerging group of civil society critics with those Alliance radicals who mean what they say. While the latter have spoken eloquently through recent discussion papers (including "Global Economic Crisis," "State, Property Relations and Social Transformation," and "State, Reform and Revolution"), so too have the former drawn up statements about a forthcoming "Africa Consensus" to transcend both Washington and the World Bank's "Post-Washington Consensus" (for example, in the NGO/church/social movement declarations of Accra, Gauteng, Lusaka and Nairobi over the past year, paralleling similar radical civil society declarations in Latin America and Asia).

Is it time to think globally and act globally? South Africa as a nation retains enormous international credibility, and the Alliance can look back on its own 1960-80s call for anti-apartheid financial sanctions as a seminal lesson in how to successfully pressure international finance. The broader strategic trajectory of the SACP's natural international allies--from Old Left political parties and trade unions to New Left social movements, from the richest to the poorest countries--can be strongly influenced by the way these debates are resolved in South Africa.

This essay, therefore, attempts not only to document Africa's misery, but to situate the best regional and international sentiments from the Alliance within the dual context of Africa's economic crisis and the world economy's vulnerabilities. Contradictions are identified, and strategic implications are drawn from the various choices that follow from Alliance debates. My conclusion is that the SACP should consider constructive criticism of SA government policy now emerging from progressive civil society as a challenge worth not only taking seriously in intellectual and strategic terms, but also worth nurturing politically.

The African crisis continues

There are internal and external reasons for the economic crisis sub-Saharan Africa has suffered for the past quarter-century, a crisis which has reduced standards of living in many countries to 1950s-levels, and in some cases served as a primary catalyst for extraordinary social, civil and regional conflicts. Just recall the countries that within the last decade have witnessed extremely serious conflict (ranging from genocide to attempted coups): Angola, Benin, Burkina Faso, Burundi, Cameroon, Chad, Congo, Cote d'Ivoire, the Democratic Republic of Congo, Ethiopia, Gabon, Ghana, Guinea-Bissau, Kenya, Lesotho, Liberia, Malawi, Mali, Mozambique, Namibia, Niger, Nigeria, Rwanda, Senegal, Sierra Leone, Somalia, South Africa, Sudan, Togo, Uganda, Western Sahara and Zambia.

The internal reasons for Africa's economic problems vary, but included inherited colonial legacies (including the illogicality of many borders) and the transition from colonialism to undemocratic (and often corrupt), highly-militarised neo-colonial regimes which adopted development strategies that benefited a few urban elites at the expense of peasants (especially women producers), workers and even local manufacturers. Some such strategies were export-oriented, while some were based on a rhetoric of inward-oriented development and "import-substitution industrialisation" (these also sometimes entailed a rhetoric of "African socialism.") Both generally failed over the long term.

Export-led growth strategies were typically promoted as a central component of "macroeconomic reforms" imposed on countries by lenders and Northern "donor" governments. The limits to producing more exports for declining, glutted world markets are discussed below.

Likewise, inward-looking import-substitution industrialisation (dating from the 1950s) was misguided, for it typically did not foster linkages between mass consumption and mass production (which would have led to greater balance and sustainability), but rather was aimed--as in South Africa and Zimbabwe, the two economies with the most advanced manufacturing sectors--at establishing local production of luxury goods for mainly white consumers. Ironically this made these countries even more dependent on external sources of machinery, parts and raw materials than they had been earlier.

In virtually no cases, in Africa or elsewhere, were power relations optimal to develop an economy from the standpoint of meeting the basic needs of all citizens, even though this kind of strategy would have far greater "multipliers" (economic spin-offs) than multinational corporate investment priorities or many African rulers' own prestige projects.

And as shown below, there are two main external factors associated with Africa's economic crisis: falling international commodity prices since the mid 1970s, and rising "real" (after-inflation) interest rates since 1979 in a context of massive external debt.

It is impossible, of course, to attribute blame as to whether Africa's crisis stemmed mainly from external or internal factors. To complicate matters, these have blurred since the 1970s due to growing "comprador" relations between most African government leaders (especially those associated with finance ministries) and their supporters in Washington DC, London and Paris.

But given the material conditions associated with declining "terms of trade" between South and North and the worsening debt crisis, as well as the crisis in macroeconomic policy discussed below, the factors that made it possible to justify this alliance are fading. To assess whether there may be scope for taking advantage of the international crisis associated with the discredited Washington Consensus ideology, requires revisiting economic depression in Africa in more detail. We start with declining terms of trade and then consider the debt crisis.

Unfair trade

Africa has suffered unfair terms of trade--the difference between prices paid for exports in relation to prices paid for imports--since the peak of demand for its raw materials (and before synthetic substitutes were invented) during World War II. From the mid 1970s, terms of trade worsened, in part because of export-oriented policies (discussed below) which most African countries were compelled to adopt once they experienced debt crisis.

The decline in the price index for the main (non-fuel) commodities dropped especially dramatically from 1977 to 1982, while the export prices of developed countries increased steadily. During the 1982-90 global expansion, the terms of trade of Third World countries still declined markedly, by 4% per year. Much of the decline was due to the drop in oil prices that began in earnest in 1986, but non-oil producing Third World countries also witnessed a negative 1.5% annual deterioration in the prices of their prices of exports relative to imports. This trend continued after the 1990-92 global recession, leaving 1998 commodity prices at their lowest levels since the Great Depression.

In broader historical terms, the prices of primary commodities (other than fuels) have risen and fallen according to a deeper rhythm. Exporters of primary commodities, for example, have fared particularly badly when financiers have been most powerful, leading to cycles of debt, export-intensity and bankruptcy. The interrelations are reflected in the fact that from 1973 to 1988, the prices of agricultural crops and minerals (other than fuels) fell by 77%, while global real interest rates rose from -4% to 4%.

Africa's declining terms of trade are particularly important because of the continent's extraordinary dependence upon a few export commodities. The following countries suffer from reliance upon a single product for at least 75% of their export earnings: Angola, Botswana, Burundi, Congo, Gabon, Guinea, Niger, Nigeria, Somalia, Uganda, and Zambia.

The only countries in sub-Saharan Africa which have diversified their exports so that they claim at least 25% of their export earnings from more than four products are the Gambia, Lesotho, South Africa, Swaziland, Tanzania, and Zimbabwe; everywhere else in the subcontinent, four or fewer products make up three quarters of export revenues. More than three quarters of all Africa's trade is with developed countries.

The export-led growth strategies pursued since the 1970s by virtually all Third World countries have meant that Africa's market share of world commodity prices has also shrunk drastically. In the 1970s and 1980s alone, the African market share of coca fell from 75 to 58%, of palm oil from 58 to 18%, of sisal from 48 to 36%, of coffee from 35 to 20%, of crude petroleum from 15 to 8%, of cotton from 12 to 7%, and of copper from 10 to 6%.

Notwithstanding falling prices and market shares, African economies have not made the necessary switch from reliance upon primary export commodities. One reason is that state marketing boards are mandated to conduct foreign trade at ridiculously low prices (even at a loss, in fact) simply so as to acquire the foreign currency needed to service large foreign debts. This formidable problem we take up next.

Rising debt

Since capitalism emerged as the dominant world system in the early 1800s, there have been cycles of economic growth followed by debt crisis, lasting approximately 50-70 years. These "Kondratieff Cycles" (named after the Russian who first noticed them) or "long waves" (distinct from short-wave business cycles), are based on the tendency towards systematic overproduction of goods, followed by the rise of speculative financial activities in turn followed by system-wide crashes.

Thus at least one third of all nation-states fell into effective default during the 1820s, 1870s, 1930s and 1980s-90s. The current economic cycle has evolved steadily, since the 1970s, from overproductive sectors of the world economy--raw materials and manufactures alike--into financial markets (stocks, debt instruments, real estate and other speculative outlets).

Africa was drawn into debt crisis in ways that in retrospect are entirely unjustified. The two most obvious problems were the use to which borrowed money was put, and the variable (fluctuating) rate at which most foreign debt was contracted during the 1970s. While some of the debt originated in a need to cope with the 1973 increase in global oil prices, much of the rest was unnecessary, and destined for white elephant projects, arms expenditure and import of luxury goods. The banks that lent the money were obviously at fault for "loan-pushing." Some of the money was understood to be lining the pockets of corrupt African elites, but international banks, the World Bank and IMF ignored the moral implications of lending to a Mobutu, or for that matter a PW Botha.

Moreover, during the initial rise in African foreign debt, through most of the 1970s, the interest rates on dollar-denominated loans were negative in real terms (i.e., once inflation was discounted, it cost less to repay the loans than they were initially worth). Then in 1979, the interest payments suddenly increased dramatically when the US Federal Reserve implemented "monetarist" (high-interest rate) policy. >From negative rates in the 1970s, inflation-adjusted interest rates averaged 2% above the average annual growth of the world economy (3%) during the 1980s.

A related issue was the "collateral"--also known as security--on such loans. Such security was thought not to be an issue, since sovereign countries in the post-war era were not supposed to default. To this end, the IMF was used during the first part of the 1980s as a vehicle for ensuring African countries repaid Northern commercial bank loans, in exchange for the IMF gaining the power over those countries to impose austere macroeconomic policies which emphasised liberalisation, export orientation and an end to social subsidies.

The World Bank stepped in later in the decade when the IMF's credibility ran out (and its funding became temporarily scarce). The Bank moved from merely imposing "conditionality" on individual project loans, to financing of full-fledged "structural adjustment"--the term used when a country adopts a policy of austerity.

All of this represented little more than a "baleout" (by Northern taxpayers via the IMF and World Bank) of Northern commercial banks. The incoming funds continued to decline, and by 1984, net financial resource transfer to the Third World were negative for the first time as countries spent more on interest payments than they gained in new loans. By the end of the decade, the net South-North transfer had reached $50 billion a year. This was an important aspect of the strategy by which financiers shifted the costs of their loans onto innocent victims, whether Third World peasants or taxpayers of the major industrial countries.

As a result, the Third World debt crisis was considered "solved" by the early 1990s, as most Northern banks had by then discovered various means of either getting their Third World loan money back via IMF/World Bank baleouts; or selling the bad loans at a discount on "secondary markets" of sovereign debt; or quite commonly, declaring the loans as unrepayable for local tax purposes but continuing to demand repayment by Third World countries. As a result, the debt crisis no longer threatened the Northern banks.

However, in contrast, developing countries found that by 1997 they still had more than $2 trillion in foreign debt to repay (up from $1.3 trillion during the early 1980s when the debt crisis broke out and $1.4 trillion in 1990). In 1997, the debtor countries paid the North $270 billion in debt service ($60 per person), up from $160 billion in 1990; in net terms, African countries paid $162 billion more than they received in new loans in 1997, up from $60 billion in 1990. But the overall debt continued to serve as a noose around Africa's neck, because even interest payments of typically more than 20% of export earnings never reduced the debt. For this reason much of the African debt was labeled "unrepayable."

Beginning with Mexico in 1982, the unrepayable nature of the debt caused a series of Third World defaults. Sometimes the defaults were delayed by virtue of the World Bank and IMF arranging an urgent credit for the purpose of paying debts coming due. Once in a while, governments stood up to international pressure by declaring a partial repayment moratorium. They attracted enormous political pressure, as in the cases of Zambia under Kenneth Kaunda, Brazil following its temporary 1987 default, Peru under the populist Alain Garcia, or Nicaragua under the Sandinistas (South Africa in 1985-87 may be the most successful counterexample, as Pretoria successfully negotiated a repayment "standstill" from apartheid-friendly Northern banks).

The African debt is particularly onerous for the poorest African countries, which defaulted en masse during the early 1980s, but were simply given new loans to pay off old loans. As a result, although between 1984 and 1996 the lowest-income African countries paid $1.5 billion in repayments--a sum 1.5 times greater than the amount owed in 1980, as a result of compound interest payments--they owe far more today than then. Repayment averaged 16% of African government spending during the 1980s, as compared to 12% on education, 10% on defence and 4% on health.

There is convincing documentation that women and vulnerable children, the elderly and disabled people are the main victims of debt repayment pressure, as they are expected to survive with less social subsidy, with more pressure on the fabric of the family during economic crisis, and with HIV/AIDS closely correlated to structural adjustment. (Ironically, at the recent Lusaka AIDS conference, the World Bank's vice president for Africa offered hard-currency loans to governments for AIDS prevention--when the Bank has been accused by the US Center for Disease Control of exacerbating the spread of HIV/AIDS in Africa through its economic policies.)

Africa "reforms" for Washington's benefit

Most of the macroeconomic reforms imposed by the World Bank and IMF on African (and other Third World) countries since the late 1970s have followed a simple menu. The ingredients endorsed by the Washington Consensus nearly always involved the following:

  • government budget cuts, increases in users fees for state services and privatisation of state enterprises (including even municipal services);
  • the lifting of price controls, subsidies and any other distortions of market forces;
  • liberalisation of currency controls and devaluation of the currency;
  • higher interest rates and deregulation of local finance;
  • removal of import barriers such as trade tariffs and quotas; and
  • an emphasis on promotion of exports, above all other economic priorities.

The effects of these policies were quite consistent, and were nearly universally detrimental to development. Budget cuts depressed economies' effective demand, leading to declining growth; they also were targeted often at the poorest, least organised groups in society (notwithstanding a few social programmes sometimes tacked on so as to mitigate the effects of structural adjustment).

Often the alleged "crowding out" of productive investment by government spending was not actually the reason for lack of investment, so the budget cuts were not compensated for by private sector growth. Imposition of user fees led to a decline in utilisation rates for health and educational services, which in turn reduced "human capital formation," again with women suffering disproportionately.

The implementation of privatisation often did not distinguish which state enterprises may have been strategic in nature, was too often accompanied by corruption, and often suffered from foreign takeover of domestic industry with scant regard for maintaining local employment or production levels (the incentive was sometimes simply gaining access to markets). There were no attempts by World Bank and IMF economists to determine how state agencies could supply services that enhanced "public goods"--for example, the positive effects of water supply on public health, environmental protection, local economic activity and gender equality--and thus all state services were reduced to mere commodities, requiring full cost-recovery and elimination of subsidies.

Another central reason for declining economic growth under structural adjustment was the tendency for interest rates to jump to very high levels once financial controls were released, or when a foreign currency crisis emerged. Hardest hit were often small businesses. Likewise, the lifting of price controls along with foreign currency liberalisation and currency devaluation often created a generalised inflationary tendency, accompanying a surge of luxury-goods imports (while this made more goods available especially in elite urban shops, they were often so far out of range of most consumers that the benefits of price liberalisation were simply not passed down). The emphasis on liberalising imports and promoting exports did virtually nothing to improve the "balance of trade" (in some cases it caused trade surpluses to rapidly become deficits).

Given that power over Third World countries resides more in Washington and its allied financial markets than in national capitals, it is perhaps not surprising that an entire generation of nationalist leaders were compelled to shift course from their populist mandates, towards implementing ineffectual structural adjustment programmes (which in turn generally destroyed their popularity): Aquino (Philippines), Arafat (Palestine), Aristide (Haiti), Bhutto (Pakistan), Chavez (Venezuela), Chiluba (Zambia), Dae Jung (South Korea), Havel (Czech Republic), Mandela (South Africa), Manley (Jamaica), Megawati (Indonesia), Musoveni (Uganda), Mugabe (Zimbabwe), Nujoma (Namibia), Ortega (Nicaragua), Perez (Venezuela), Rawlings (Ghana), Walensa (Poland) and Yeltsin (Russia). (So too did once-"communist" governments, in Mozambique, Angola, Vietnam and China, endorse a raw market-oriented and export-led strategy. And indeed traditional labour and social democratic parties across Europe and Australia/New Zealand also capitulated to the Washington Consensus.)

Futile Washington spin control

By the late 1980s, after about a decade's experience in approximately three dozen African countries, critics more forcefully questioned macroeconomic reform. A debate raged about whether two World Bank reports (Africa's Adjustment and Growth in the 1980s and Sub-Saharan Africa: From Crisis to Sustainable Growth, both published in 1989) adequately explained the continent's dramatic declines in standards of living, terms of trade and ability to service debt. There was great doubt about the truth of a Bank claim that during the late 1980s, countries which adopted orthodox macroeconomic reforms grew more quickly.

Arguing in favour of structural adjustment, the World Bank was joined by many African leaders who probably felt they had no other choice in the matter. Their adoption of structural adjustment as (cynically-named) "homegrown" programmes can only be understood against the need the Bank expressed, by the late 1980s, for legitimacy.

To illustrate, senior Bank official Geoffrey Lamb described the following innovation in a 1987 internal report: "Building an independent technocratic policy capacity within member countries is therefore important to encourage domestic political accountability for policy decisions over the longer run and for improving the credibility of economic advice to countries' political leaderships--provided that support for technocratic `policy elites' does not too drastically compromise the recipients' influence." (Lamb, now the World Bank representative in London, was an SACP member during the 1960s, and supervised the PhD theses of several South African marxist scholars at Sussex University during the 1970s, before doing an ideological and moral U-Turn during the 1980s.)

But many more Africans were not impressed. The United Nations Economic Commission on Africa, led by Adebayo Adedeji, offered two rebuttals: Statistics and Policies: ECA Preliminary Observations on the World Bank Report and the African Alterative Framework to Structural Adjustment Programmes (AAF-SAP). Further critique of structural adjustment emerged from case studies by independent observers, an IMF acknowledgement that growth was slower in countries undergoing structural adjustment than in those that avoided adjustment, as well as social statistics and reports from the UN Conference on Trade and Development, UN Children's Emergency Relief Fund, Food and Agricultural Organisation.

So too did the modus operandi of the Washington institutions come under critical scrutiny. In 1992, the Bank's internal "Wapenhans Task Force" report on portfolio performance concluded that 37% of Bank projects were completed "unsatisfactorily" in 1991, and more than 40% of Water Supply and Sanitation projects (especially in Africa) had "major problems." Wapenhans also acknowledged a variety of valid borrower complaints (mainly from Third World finance ministries):

  • "Bank staff know what they want from the outset and aren't interested in hearing what the country has to say";
  • "After all the documents are signed, the Bank can change philosophy again";
  • "The Bank overpowers borrowers, and the country negotiating team often doesn't have the strength to resist";
  • "The staff rigidly insists on as many conditions as possible, some of which reflect insensitivity about the political realities in the borrower country."

In 1993 World Bank vice president for Africa Edward Jaycox acknowledged that "The donors and African governments together have, in effect, undermined capacity building in Africa. They are undermining it faster than they are building it, or at least as fast." Indeed, 51% of the Bank's African projects were considered failures according to its own internal evaluations, and more than $20 billion in approved Bank loans to Africa were still not disbursed as of 1996 because of the damage that the Bank and IMF did to state administrative capacity.

If local capacity-building, economic growth and development were not, therefore, the point of Washington Consensus reforms, the underlying logic was expressed frankly, albeit in jargon-ridden terms, in 1990 by World Bank economist Manuel Hinds: "the overall model chosen to integrate the economy into the international markets... should aim at avoiding the appropriation of rents by suppliers of nontradables and workers. That is, they should maintain the real wage low, so that excess profits accrue to capital... In carrying out all these activities, a close alliance between Government and private agents must be developed."

The experience of African foreign debt, which has cut short so many tens of millions of lives and ruined the futures of entire generations of Third World people, can indeed probably be boiled down to an exercise in "maintaining the real wage low, so that excess profits accrue to capital." The result was the reintegration of the Third World into the world economy on extremely unfavorable terms.

But recall that all of these flows of capital were, at root, premised on the slowdown in economic growth in the major industrial countries beginning during the 1970s. Thus the power of finance over the Third World during the 1980s represented not so much a true "solution" in terms of more open trade and investment prospects (and hence higher TNC profits and lower global wages than would have been the case otherwise), but rather a deepening of the problem, as the limits of the strategy of draining the Third World were felt by even the most powerful of the world's banks. Indeed the Third World debt crisis contributed powerfully to international financial turmoil.

Yet unlike the 1930s, the Northern creditors have not yet suffered the kind of generalised financial collapse that gave so many other countries the ability to default, without serious political ramifications (those earlier creditors were mainly individual bondholders, not centralised, powerful commercial banks and Washington financial institutions). Instead, the debt has been rolled over and meagre amounts of "debt relief" have been ladled out to countries which continue to play by Washington's rules.

No relief

With virtually no official resistance from the South, aside from Fidel Castro's regular but unsuccessful exhortations for Third World leaders to stand up to imperialism, the last quarter-century's amplified misery for most of the world's citizens reached embarrassing proportions by the late 1990s:

  • the gap between the poorest fifth of the world's people and the richest fifth increased from 30:1 in 1960 to 90:1 today;
  • the net worth of the world's 3 richest people is greater than the national income of the forty-eight poorest countries combined, and the world's 225 richest individuals have a combined wealth (over $1 trillion) equal to the annual income of the poorest 47% of the world's population;
  • 1.3 billion people survive on $1/day, 3 billion people survive on $2/day, and 2 billion have no access to electricity;
  • one in five people do not expect to live beyond the age of 40, three out of four in the poorest countries will not live to 50; and 300 million people live in 16 countries where life expectancy decreased between 1975 and 1995;
  • of a global total of 52.2 million deaths in 1997, 17.3 million were due to infectious and parasitic diseases, 15.3 million were due to circulatory diseases, 6.2 million were due to cancer, 2.9 million were due to respiratory diseases and 3.6 million were due to perinatal conditions--according to the World Health Organisation, "Most of these deaths are premature and preventable."

Given the obscene inequality and suffering associated with declining terms of trade, rising debt and structural adjustment programmes, some African countries were chosen by the World Bank and IMF as beneficiaries of the "Highly-Indebted Poor Country" (HIPC) initiative. Most importantly, HIPC allows merely a write-off of unserviceable debt, which no one ever expects the poorest countries to repay.

Mozambique's experience is telling. By 1998, critics included even relatively conservative leaders--President Joachim Chissano, Prime Minister Pascoal Mocumbi and Finance and Planning Minister Tomaz Salom--whose strong commitment to HIPC had earlier been considered the basis for more relief than any other case.

In Mozambique's case, however, the 1998 HIPC debt relief amounted to only about $10 million per year (a reduction in annual interest repayments from $110 million to $100 million) and the strings attached included an order by World Bank president James Wolfensohn in March 1998 to raise the user fees for public health services by a factor of five, and to privatise municipal water. Already, acknowledged Wolfensohn, water "tariffs have been increased sharply in real terms over the past 18 months and are to be increased even further prior to the signing of management contracts."

In June 1999, under pressure from protests at the Cologne G-8 meetings, another $28 million in annual payments to the Bank and IMF were canceled. But at more than $70 million in repayments in 1999, Mozambique will still spend far more in debt servicing than health and education. The IMF's expanded Mozambican debt relief also entailed 71 brand new conditions, among which were that Mozambique must not resurrect its cashew processing industry using traditional industrial policy tools, and also must effectively end state attempts to provide water to the rural poor.

Notwithstanding a national debate about the World Bank's mistaken 1994 decision to force both privatisation and trade liberalisation on the cashew processing industry, which led to the closure of ten major plants and the layoff of 10 000 workers (half women), the IMF prohibited Mozambique from imposing a 20% export tax on raw nuts that the parliament was on the verge of approving so as to save the processors from subsidised international competition. The IMF also encouraged the parliament to adjust the overall tax structure to make it more regressive (i.e., the rich will pay a decreasing share of their income).

Yet more arrogantly, the IMF used new jargon in applying neoliberal conditionality to the rural water sector. The Enhanced Structural Adjustment Facility Framework Paper for April 1999-March 2002 insisted on the Mozambican government "transforming the planning and delivery of rural water and sanitation services from a supply-driven model to a sustained demand responsive model, characterised by community management, cost recovery, and the involvement of the private sector." The "demand-responsive approach" is an increasingly discredited development approach, having failed dramatically when applied to rural water projects in far-wealthier countries like South Africa. Such cost-recovery strategies simply don't work in a country in which 70 per cent of the population live below the poverty line.

HIPC is now widely condemned for merely prolonging Africa's debt misery. There is emerging, both from within Africa and from Northern (and other Southern) solidarity activists, a vibrant social movement whose objective is the full cancellation of Third World debt by next year. The movement--"Jubilee 2000" (named after a statement in Leviticus that debts should be periodically cleared to give debtors a chance at revival)--has played an extremely effective role in bringing the issue to the international public agenda. Even if right-wing allies--the Pope and economist Jeffrey Sachs--have endorsed Jubilee, more importantly a Jubilee South movement is growing, and will hold its first major summit in Johannesburg from 18-21 November 1999.

The tradeoff that Jubilee 2000 posits is simple. In 1996, sub-Saharan Africa paid the developed world $13.4 billion, in part by borrowing $9.5 billion in new funds and using $2.6 billion of its Northern aid. By way of contrast, the cost of meeting basic goals in Africa for universal health, nutrition, education and family planning is only about $9 billion a year.

Jubilee 2000 protests against this embarrassing spectacle has compelled even Bill Clinton to cancel US bilateral debt in September 1999. Yet as Jubilee's South African chapter responded, the relief was highly conditioned:

Since the 1980s, we have heard many grand announcements on debt "cancellation". Yet the debt crisis in the Third World is greater than ever. It is therefore with caution that we welcome President Clinton's announcement of the 100% cancellation of the United States bilateral debt... The imposition of structural adjustment conditions attached to the promised 100% bilateral cancellation is not an effective way to eradicate poverty. It will obstruct real debt cancellation, increase joblessness, limit delivery of social services, and deepen poverty and inequality. He also needs to scrap his Africa Growth and Opportunity Bill which, if it becomes law, will result in even harsher conditions being imposed on African countries. Jubilee 2000 opposes the use of debt cancellation to unilaterally impose economic policies that are detrimental to the poor. Still too few countries are being promised cancellation of too-narrowly selected debts. For a debt-free millennium, Jubilee 2000 calls for the total cancellation of all Third World debt. Clinton's offer to cancel the bilateral debt of just 36 countries falls well short of our demand.

South Africa's vulnerabilities

The African economic crisis and half-hearted relief measures are not merely a problem for South Africa because of our proximity to lowest-income African countries. South Africa has also been tragically vulnerable to the worst excesses of the global economy. It is worth reflecting on why this is the case, before considering openings to the left that emerge from the crisis.

Unlike most African countries which do not attract private sector financial capital, South Africa is an "emerging market." It has joined a group of countries where, beginning in the mid-1990s, financial crises have erupted in a terrible arc of social and economic destruction: Mexico (early 1995), South Africa (early 1996), Southeast Asia (1997-98), South Korea (early 1998), Russia (periodic but especially mid-1998), South Africa (again in 1998), and Brazil and Ecuador (early 1999).

How did South Africa become so vulnerable? In March 1995, macroeconomic managers Chris Stals (Reserve Bank governor) and Chris Liebenberg (finance minister) abolished the "financial rand" exchange control mechanism, the country's main barrier to global financial flows. As a result, vast amounts of "hot money" flowed into South African shares that year, funding half the trades on the Johannesburg Stock Exchange. Foreign purchases of South African bonds doubled from the past decade's levels.

But in February 1996, the hot money flowed back out, leading to a currency crash of roughly 30% in nominal terms over several months, set off by a Union Bank of Switzerland "sell" report inspired by a false rumour that then-president Nelson Mandela was ill. The adoption of the homegrown structural adjustment programme Growth, Employment and Redistribution followed soon after, as a direct response to international investor demands.

Again, 30 months later, during a few weeks in mid-1998 as global investors fled emerging markets following East Asian and Russian collapses, South Africa again faced financial crisis. More than R30 billion in hard currency reserves were wasted by Stals in his unsuccessful attempt to defend the rand (a move later condemned by the IMF, which Stals too acknowledged was a mistake). In the midst of an unprecedented 40% April-September 1998 stock market crash, Stals then raised interest rates by more than 7%, generating a subsequent slowdown of the economy. But the value of the currency continued dropping, until it was down by 30% before subsequently making a slight recovery. (Tragically, in October 1999, Department of Finance director-general Maria Ramos told Business Day that government would again do what it did in 1998, when financial crisis again strikes.)

By all accounts, a key reason for Gear's failure was the disappointing behaviour of foreign financial, investment and trade flows. However, there is a domestic root to the problem, namely the biased structure inherited from apartheid, based on an overblown "minerals-energy complex" and excessive luxury goods production for a protected white consumer elite, at the same time capital goods (aside from mining-related) and mass-consumption basic needs goods were systematically underdeveloped.

Failing to address this bias--indeed amplifying it through trade liberalisation and export-oriented agro-mineral strategies (the latter subsidised through Spatial Development Initiatives), while insufficient resources were allocated to basic-needs consumption--was one basis for South Africa's growing vulnerability.

The second obvious bias was in the reliance upon mineral exports during a time of falling commodity prices. Gold fell spectacularly from 1981 ($850/ounce) to 1999 (as low as $250/oz, before speculators drove it up to $300/oz when inflation fears and financial worries surfaced in the US). During the late 1990s there was enough volatility in the zinc market to kill off plans for a new smelter near Port Elizabeth, and iron, steel and other metals also suffered substantial price falls.

A third reason for vulnerability is South Africa's enormous domestic and foreign indebtedness. Domestic debt/GDP ratios were at their highest in history (driven up by consumer and state debt). Given power relations at the time, a decision was taken by ANC economic officials in October 1993 not to renegotiate the questionable apartheid-era foreign debt (mainly taken on by private borrowers, but guaranteed by the state). In a just world, that debt would have been considered "odious," which in international law--as first established by the United States in relation to Cuba's odious colonial-era debt to Spain--connotes a status associated with illegality.

What to do about apartheid foreign debt?

Indeed a case could easily be made that foreign lenders to South Africa have liability for reparations to democratic South Africa, particularly given calls for financial sanctions dating to the 1960s (by the ANC leader Albert Luthuli and US civil rights leader Martin Luther King, Jr). Efforts by the ANC to impose sanctions intensified during the 1980s, and these included demands that no credits to South African parastatals or private-sector borrowers be advanced, for the Reserve Bank used the proceeds of such credit for the apartheid state's hard-currency requirements.

Likewise, when in September 1985 the standstill arrangement was imposed, the apartheid state compelled local private sector borrowers to consolidate their foreign debt into a $13 billion standstill net. Those private borrowers continue to repay apartheid-era foreign debt, but the South African state guaranteed the repayment (partially through the Reserve Bank "forward cover" arrangement). Hence apartheid-era foreign lenders to South African private sector borrowers were complicit in maintaining funding flows to the state, and vice versa.

By 1994, the apartheid foreign debt was around $25 billion, including a large share from parastatal agencies and private borrowers. The Jubilee 2000 movement demands that repayments continue from private sector borrowers, but instead of going to the complicit foreign lenders, the money should be repaid to the victims of apartheid, through a democratically-established and -managed reconstruction fund. (An ANC banking report in 1991 made the same suggestion.)

Winning the battle not to pay for apartheid twice--first by bullets bought with loans made by Citibank and Barclays, and then again, diabolically, by repaying Citibank and Barclays after democracy was won!--would be good not just for those in South Africa suffering budget cuts. In Burma, Tibet and other sites of repression, attempts are being made to invoke South Africa-style financial sanctions. But imagine a letter from a Citibank executive to Aung San Suu Kyi, the Nobel Peace Prize laureate who leads Burmese democratic movement: "You have demanded that I boycott loans to the military junta running your country. I heard that somewhere before: from the ANC. But then South Africa paid back apartheid loans. Really, why should I take any other financial sanctions campaign seriously, now?"

The main problem Jubilee has had in convincing government to declare apartheid debt as odious, and thus to avoid sabotaging other liberation movements, is the fear by the Finance Ministry that this would prejudice South Africa's international financial reputation.

The rebuttal is two-fold: firstly, taking action against the worst depravations of international financial markets is not necessarily suicidal, as Malaysian prime minister Mahathir Mohamed showed with his highly successful September 1998 exchange controls (and South Africa can claim far greater credibility, a higher moral standing and more international allies than could Mahathir); and secondly, if there are subsequent problems in accessing new foreign loans following the repudiation of apartheid debt, this would force South Africa to rethink its hard-currency needs in ways that may actually benefit the society.

The Reserve Bank uses hard currency, partly drawn from export earnings and partly drawn from new capital inflows, for three purposes that society should critically question: repaying apartheid debt; importing inappropriate capital-intensive machinery which displaces workers; and importing luxury goods. Obviously, import of raw materials and other vital inputs would have to be financed, but export credit agencies are always available for that purpose.

Playing to lose

Instead, the Finance Ministry would rather play the game according to international financial rules, no matter that SA is dealt a losing hand. The oft-expressed hope that things will improve without challenging Washington appears naively optimistic, for three reasons: the underlying base of the economy is weak; financial flows continue to wreak havoc; and trends in trade are working against South Africa's interests.

Firstly, South Africa is extremely uncompetitive as a site for manufacturing exports (perennially ranking amongst the very least efficient countries in the annual World Economic Forum surveys). The local economy remains stagnant, unbalanced in its orientation, and highly monopolised. Debt, high interest rates and locally-volatile financial markets have raised country risk conditions.

It is not surprising that post-apartheid Foreign Direct Investment (FDI) flows were of the merger/acquisition variety, instead of greenfield projects entailing the import and establishment of new plant, equipment and job opportunities. Moreover, many billions more rand have been exported via South African firms' direct investment out of the country, than new FDI into South Africa. According to official figures the 1994-99 direct investment flow included R31,5 billion FDI and R41,9 billion in outward SA investment, for a net negative R10,4 billion.

Secondly, problems caused by excessive hot-money inflows and outflows were described earlier. In addition, overseas portfolio investment by South African financial institutions since 1990--for which no reliable records exist given widespread fraud associated with commercial banks and the Reserve Bank--includes the growing operations of the major banks in offshore financial centres (Cayman Islands, Bahamas, Panama, Jersey, Guernsey, Isle of Man, Isle of Wright, etc); a desperate search for foreign funds sources cheaper than those prevailing in South Africa (with currency risk on foreign loans guaranteed by the SA taxpayer); and, in 1998, questionable South African bank loans to Russia and Brazil as those countries offered higher rates of returns on loans (the largest SA bank lost ?50 million in a Russian loan after Yeltsin's August 1998 default, which required expatriation of SA's hard currency reserves to its London subsidiary so to cover the loss).

The overseas stock market listings of several large companies--Anglo American, South African Breweries, Old Mutual--was meant to bolster South Africa's foreign reserves through remittances to local shareholders. But they also represent a future flow of capital appreciation and dividends to non-residents, and the recipients of the sales receipts of local shares are amongst those South Africans most likely to emigrate, also demanding expatriation of their funds.

On top of economic vulnerability, there are immediate political vulnerabilities to foreign financial flows. Witness the New York financier quoted (in Business Report) during the counting period just three days after the second democratic election (before the final vote tally was released), in June 1999:

Foreign investors were becoming increasingly anxious yesterday at the prospects of the ANC winning a two-thirds majority in Wednesday's general election, with a major investment fund warning this may have a devastating effect on local financial markets. Mark Mobius, the president of the $40 billion Templeton Emerging Market Fund, said he would fundamentally alter his investment view of the country if the ANC won 67% of the vote. Mobius, one of the most respected emerging market investors, administers the $40 billion fund, one of the largest investors in South Africa's financial markets. It is heavily weighted towards the country, at 8,5%, or about $3,4 billion. "If the ANC gains the power to unilaterally amend the Constitution, we will adopt a very conservative and cautious approach to further investment."

Thirdly, trade liberalisation may have increased trade flows somewhat, but it had a devastating impact on many local industries--appliances, electronics, clothing, textiles, shoes--competing with highly efficient, highly organised and well-financed global corporations, and with overseas export platforms (like China's east coast) which boasted extremely low labour and environmental standards. The periods following the 1996 and 1998 currency crashes were not as useful to exporters as might have been anticipated, as non-gold exports rose in 1997-98 by just 5,3 and 2,1%, respectively, confounding Gear projections of 8 and 7% (although 1996 export growth was better than predicted). Moreover, trade with Africa became extremely biased, contributing to geopolitical tensions and economic refugees from neighbouring lands (and resulting world-class xenophobia by South African workers).

One reflection of the intrinsic trade advantage experienced by multinational corporations against South Africa was the 1998-99 campaign by pharmaceutical manufacturers and allied US and European politicians to force the South African health ministry to end not only its attempt--in the 1997 Medicines Act--to import cheap anti-viral HIV/AIDS and other medicines (and license them locally in South Africa instead of relying upon the products of multinational drug companies). The campaign, partly aimed at South African public advocacy through the World Health Organisation, included US tactics that the State Department described as a "full court press" in a 1999 report to the US Congress. Thus for all its talk of supporting the newly-liberated country, the United States was keen to teach South Africa tough lessons in international trade relations.

Finally, while South Africa witnessed a net outflow of resources since 1994, there was, worse, also a net inflow of economic advice from the international financial centres, based not only upon persistent demands for macroeconomic policies conducive to South Africa's increased global vulnerability, but also to social policies that weakened the state, the working-class, the poor, women in particular, and the environment.

The first five years of ANC rule included adoption of many controversial policies which were either authored by or strongly encouraged by World Bank staff: the failed "willing-seller, willing-buyer" land reform policy; the "toilets-in-the-veld" housing strategy (as Minister Sankie Mthembi-Mahanyele herself labeled the stingy, bank-centred policy); the Lund Commission's draconian cuts in child welfare grants; the Municipal Infrastructure Investment Framework policy which emphasised the need for low standards, cost-recovery and privatisation; and the water pricing policy, where the World Bank claimed in 1999 that its "involvement was instrumental in facilitating a radical revision in SA's approach to bulk water management."

In sum, post-apartheid foreign direct investment, foreign portfolio (hot-money) flows, trade, debt and international policy advice all acted to the country's disadvantage. Africa remains mired in a trade and debt trap that cannot be disguised by bogus Washington claims of gradual GDP recovery. What are the political implications?

Amongst the political implications...

It is high time that the arguments motivating leftists within the Alliance to oppose finance-driven globalisation, be synthesised with analysis and activism emanating from the most progressive organs of civil society of Africa and South Africa. The synthesis comes from a broader critique of the illegitimate power still enjoyed by Washington, and seeks to decisively weaken the undemocratic, self-destructive global financial and trade order.

Thus after two decades of international social movement efforts to reform the World Bank, IMF and World Trade Organisation (making them more green, gender-conscious, transparent and participation-oriented), a radical turn is now before us, with the best movements (especially in the South) now advocating not further fruitless reform, but instead, Washington's abolition.

For example, tens of thousands of protesters will attempt to shut down the WTO in Seattle in late November. Likewise, a recent Jubilee 2000 South Africa statement addresses the tactical opportunities associated with campaigning against the IMF and World Bank:

At our National Executive meeting on September 10, Jubilee 2000 South Africa formally endorsed efforts by our international allies--especially PAPDA in Haiti, and Focus on the Global South in Bangkok--to deny further funding to the International Monetary Fund and World Bank. We suggest this tough course of action in view of continuing conditionality on HIPC relief, the growth of austere IMF Enhanced Structural Adjustment Framework programmes, and "Washington Consensus" ideology more generally. Thanks to Bank and Fund programmes in Southern African countries as impoverished as Mozambique and as wealthy as South Africa, poverty and inequality--and social, environmental and economic degradation more broadly--have intensified.

Hence a much stronger message must now be sent to the Fund and Bank, including denying them funding through either no new recapitalisation, or through requesting of conscientious investors that they sell bonds issued by the World Bank, or through other means still to be developed. We give our endorsement to the existing strategies of defunding, and hope to work with you to develop others that appeal to all people of conscience around the world. South African liberation movements pioneered the divestment tactic in our struggle for racial equity, and we will look to our solidarity networks to remind them of the continuing need for activism of this sort, aimed at further socio-economic justice.

One of the more important intellectual statements of how this tactic relates to strategy, comes from Immanuel Wallerstein (an SACP visitor earlier this year) and his "world-systems" colleagues Giovanni Arrighi and the late Terrence Hopkins, in a 1989 book, Anti-Systemic Movements:

Popular demonstrations against officially constructed austerity plans are reported almost daily. The more these popular struggles focus in each national setting on whatever regime is in office, and so become focused on who speaks in the name of that national people as a whole, the more will such struggles weaken the workings of the world-scale class-forming process and strengthen the interstate system. The more, on the other hand, the popular movements join forces across borders (and continents) to have their respective state officials abrogate those relations of the interstate system through which the pressure is conveyed, the less likely they are to weaken, and the more likely they are to strengthen, the pivotal class-forming process of the world-economy.

And as civil society pressure increasingly compels politicians and bureaucrats to question the interstate relations which convey neoliberal pressure, then what? The goal of the "Africa Consensus" process underway with strong input from citizens' organisations in southern, western, eastern and central Africa is to emphasise regional integrity--as against SADC's current fragmentation--and to revitalise a line of argument from Africa's greatest economist, Samir Amin:

The response to the challenge of our time imposes what I have suggested naming "delinking"... Delinking is not synonymous with autarky, but rather with the subordination of external relations to the logic of internal development... Delinking implies a "popular" content, anti-capitalist in the sense of being in conflict with the dominant capitalism, but permeated with the multiplicity of divergent interests.

A recent South African elaboration of Amin's arguments by Langa Zita (in a Wits master's thesis) shows that this is by no means "out of date" dependency theory, but rather a living argument that best suits the continent's broadest socio-economic interests, through filling in gaps left by structurally-unequal international trade, underdeveloped effective demand, the domineering investment strategies and transfer-pricing by multinational corporations, and malgovernance of the African state by a comprador bureaucratic bourgeoisie.

If the current global situation presents opportunities for a synthesis between Alliance and civil society radicals who together want to disempower Washington, it will come through combining the most open approaches to Marxist analysis, the best traditions of political party visioning, the most surgical strategies, the most militant tactics and the most sustained commitment to organisation building, gender equality and environmental consciousness.

For the African crisis is generating not only anarchic despair and desperation, but also a radicalised cadreship in labour movements, civic groups, NGOs, churches, women's and youth groups, and environmental organisations. South African communists are well situated to contribute to, and learn from, the continent-wide crisis conditions and the creative modes of resistance they are provoking, and pursuing the political implications both globally and at home.

Book review

The South African struggle viewed from Moscow

Blade Nzimande reviews "ANC: A View from Moscow" by Vladimir Shubin, Mayibuye Books, 1999

Over many years Vladimir Shubin was the key liaison between the Central Committee of the Communist Party of the Soviet Union and the South African liberation movement. This book is one of the most resourceful and informative to have been written in the recent period on the history of the ANC and the national liberation struggle. It is a very detailed (and also extremely frank) account of what was, perhaps, the most challenging and complex period for the movement - the years of exile, underground and armed struggle.

If any anti-communists are looking for a book full of KGB conspiracies, machinations and manipulations they will be disappointed. Here is a frank, and at times self-critical, but always supportive, account of the relationship between the Soviet Union and the ANC between 1960 and 1991. The book creatively weaves together the history of this relationship with an account of the national liberation struggle itself, and the evolution and maturing of the ANC in the years of illegality, repression and intensifying national liberation struggle. The book is not merely an account of the relationship between Moscow and "Lusaka", but an account of the South African revolution by someone who was intimately involved and dedicated most of his life in support of the liberation struggle of the South African people.

The book is divided into three parts. Part One deals with the most difficult periods of the South African struggle, the banning of the ANC and other organisations by the apartheid regime; the debates on, and beginnings of, the armed struggle; the historic ANC Morogoro Conference in 1969 and, most interestingly, the readjustments of the ANC as an underground organisation.

The shifting balance of forces

Part Two deals with the changing balance of forces in the South African revolution covering the period between 1974 and 1985. This part proceeds from the significance of the liberation of the Portuguese colonies, particularly Mozambique and Angola, and how this impacted on the ANC in exile and the mass of the people of South Africa.

In addition this part deals with the landmark of the 1976 Soweto uprisings, their effect and aftermath, and how the ANC provided leadership to these important developments. In this period the book also covers some of the really difficult challenges facing the ANC, in particular the intensification of apartheid terrorism against neighbouring states, the controversial Nkomati Accord and the beginnings of perestroika in the Soviet Union. Perestroika brought some strains into the relationship between the Soviet Unions and the ANC.

Negotiations and the road to power

There is new information, from this period, around the beginnings of contacts between the ANC and the apartheid regime, the part played by the Soviet Union in this, as well as some of the internal debates within the ANC and the SACP. Though some of these aspects have been covered in other books and writings, Shubin provides new insights and details.

Part Three of the book (1985- 1991) largely focuses on the road to power for the liberation movement, against the background of escalating mass struggles, increasing contacts between the ANC and the apartheid regime, the unbanning of the ANC, laying a foundation for the full-blown negotiations after 1990. Some interesting new details about Operation Vula and the role of the Soviet Union in this regard are provided, ending up with the sad episode of the collapse and disintegration of the Soviet Union.

Shubin seems to hesitate a little when it comes to the Gorbachev and perestroika era. Perhaps he is faced here with a dilemma of trying to assess the implications of perestroika for the ANC, but not having enough space to provide a detailed analysis and reflection on perestroika itself. For this period Shubin gives a seemingly contradictory account. On the one hand, he claims, and indeed does provide concrete evidence, that the relationship between the ANC and the Soviet Union strengthened in many respects. Yet, at the same time, he provides evidence of cracks in the relationship. In particular, Shubin highlights the fact that in the period of perestroika there was a disjuncture between the activities of the Soviet Foreign Ministry and the International Department of the Communist Party of the Soviet Union (where he was located).

Whilst relations between the ANC and the international department remained strong, there were problems with some of the activities of the foreign ministry officials, particularly in relation to their contacts with the apartheid regime. An interesting but brief account is given on relations between the Soviet Union and the De Beers mining company, at a time when the entire foreign policy orientation of the Soviet Union towards the West began changing. Shubin also cites some very problematic statements by certain Soviet academics and Foreign Ministry officials on the question of negotiations between the ANC and the apartheid regime.

These strains were being felt inside of the ANC, and Shubin provides an interesting quote from Chris Hani, contained in the minutes of an ANC National Working Committee meeting in Lusaka on 2 May 1989. Cde Chris is quoted saying:

"Even in the USSR some academics and individuals in the Foreign Affairs Ministry have declared in favour of a negotiated settlement in South Africa.

The regime has come out on top in South Africa (they have argued) and the MDM is (said to be) exhausted and burned out. These views have had an effect on the membership, some of whom believe we are preparing for negotiations." (p.352) Shubin does of course point out that this did not mean that Cde Chris was against negotiations, but that he was concerned that statements by Soviet foreign ministry officials and Soviet academics at the time were causing confusions within the South African movement.

Notwithstanding these wobbles at the end, this book clearly underlines that the Soviet Union and, in particular, the CPSU stood firmly behind and gave unconditional support to the ANC throughout the 30 years of its illegality. Indeed the people of South Africa are greatly indebted to the role that the Soviet Union played in supporting the South African revolution. Shubin's book also effectively demystifies this relationship and demonstrates the extent to which the apartheid regime, through its intelligence apparatuses, supported by the West in many instances, tried to deliberately distort this relationship as part of an attempt to extend its political life. It was for this reason, for instance, that on receiving the Soviet delegation to the ANC National Conference on 3 July 1991 in Durban, of which Shubin himself was part, Cde Nelson Mandela said unequivocally,

"Without your support we would not be where we are now" (p.387). The book chronicles the nature and extent of assistance that the Soviet Union gave to the ANC and the SACP, pointing out that virtually every request made by the liberation movement was met, ranging from supply of arms and clothes, to scholarships and training opportunities offered to thousands of our cadres over the years.

The ANC and SACP Alliance

The usefulness of Shubin's book also lies in the fact that much as it is about the ANC, it is also about the SACP and its role in the liberation struggle, particularly during the years of exile and illegality. The book provides insights into the role of the SACP, perhaps in a manner that has not been covered before. There are facts that are brought into the public eye for the first time.

The SACP played an important facilitation role in the establishment of direct relations between the ANC and the Soviet Union in the early 1960s. What comes through Shubin's account is the dedicated, unselfish and deeply loyal commitment to the ANC shown by the SACP leadership, particularly Moses Kotane and Yusuf Dadoo, in facilitating these contacts. The SACP never sought to use this relationship and its role in it to manipulate the ANC, or to gain individual positions of influence within the ANC itself.

Shubin's book, in a frank and open way, also covers the maturing relationship between the SACP and the ANC over the years, including the ups and downs and dilemmas of the Alliance. One of the difficult dilemmas facing the SACP, in the first decade of ANC in the underground, was the redefinition of its role in the context of a struggle led by the ANC, in a period requiring maximum unity and a single political centre and authority. It was a question of reconstituting the Party in exile, without at the same time creating dual allegiances in the liberation movement.

There was a running debate centred around the reluctance of some of the Party leaders, including Moses Kotane, to reconstitute Party structures, fearing that this might cause tensions within the ANC. Indeed Cde OR Tambo himself was initially very reluctant, not because of any opposition to the Party, but because, as quoted by Shubin, it would mean having to: "identify people (whether they are communists or not) which I hated to have to do. I say we had to start thinking in terms of ANC and Party and one had stopped thinking in these terms for a whole decade" (pp.119-120).

Another viewpoint on the same question is aptly captured by Chris Hani in an interview he did with Sonia Bunting in Botswana in May 1974, and which is also quoted here: "After coming out of prison [in Botswana after the 1967 Wankie campaign] I made a serious attempt to organise party life. I saw Moses was keen on preserving the cohesion of the national liberation movement. He realised there were enemies and he felt the Party should never give them the excuse to destroy the good working relations between the two organisations [the ANC and the SACP]... In a way he succeeded, he achieved the respect of OR (Oliver Tambo) and indirectly OR's recognition of the Party is mirrored in Moses. But Moses went too far." (p.112)

Joe Slovo is also quoted from 1973, voicing a similar perspective: "Moses (Kotane) of all Communists I have known could not be described as a stereotype... whereas a lot of us could in a general way go in for more or less profound theoretical analysis, in the last resort it was Moses who was the sort of link, not only with the ordinary people but with the organised national movement, particularly the ANC...[he had] this overriding desire to maintain the cohesion and unity of the national movement, his conduct in furtherance of that approach, furtherance of that tactic, objectively speaking presented at that period actually a very big danger to the historical survival of the Party." (p.112/3)

Shubin's account of the state of the Party almost 15 years after the banning of the ANC indicates a serious absence of independent structures at the time. Clearly the SACP went through a very difficult period, almost to the point of being liquidated. The later acceptance of the Party to re-establish its structures, as Shubin says, "brought about cohesion rather than division in the ranks of the ANC. For example, a number of communists worked in the ANC camps as commissars or political instructors, such as the Party veteran Professor Jack Simons, and did their best to educate the youth - new recruits from South Africa - as loyal members of the ANC" (p.120).

Indeed the relationship between the SACP and the ANC as captured in Shubin's book, provides many insights into the history of this relationship and the politics of our revolutionary alliance, particularly the challenge of combining tactical flexibility without sacrificing the independence and vanguard role of the Party. At the same time it is the challenge of not freezing the independence of the Party, such that we lose sight of our tactical objectives.

Of course some of our cadres, particularly those who have been an inseparable part of this history as told in Shubin's book might quibble with this or that aspect of the book. History is always a contested terrain. But what is incontestable is that this book is a major historical resource and record of the South African revolution. It is also easy to read, it is written in a very simple and jargon-free language without losing its analytical depth. It is a book that every cadre of our movement must read.

The time of going to press we learnt with great sadness of the death of the ex-president of Tanzania, comrade Julius Nyerere. Incorruptible, modest but forthright, an African patriot and a socialist, Nyerere was one of the great politicians of our continent and our century.

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