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Issue 147 - Third Quarter 1997

CONTENTS

Editorial Notes

Socialiasm and the Economic Debate

Ideology and the Left

Towards Transformational Sector Policies

New confidence on the left

It is no secret that, over the last 18 months or so, there has been a sense that left-wing perspectives were on the defensive in South Africa. The pressures on our new democratic government, and the disproportionate policy-making capacity of government ministries, relative to the capacities of our ANC-led movement, have created a sense that, on occasion, strategic decisions were being driven technocratically. Government's announcement in June last year of a new macro- economic policy framework, GEAR, brought some of the underlying tensions and concerns to a head. Were we in danger of abandoning our Reconstruction and Development objectives? Who, exactly, was making policy?

In this issue of the African Communist we publish a relatively extensive Central Committee discussion document on economic policy-making in our ANC-led movement, in which we seek to analyse some of the background to the GEAR document. In the midst of a robust debate around GEAR, the SACP has set itself two basic objectives.

Our first objective has been to keep the debate on macro-economic policy wide open. We have taken up this objective both out of principle (we want to set an example of comradely debate and discussion), and out of concern with the actual content of GEAR. We fully appreciate the huge financial market pressures on government (and therefore upon all of us), and we appreciate the temptations that may exist to declare this or that policy "non-negotiable", to show "toughness" and "determination". But it is simply not helpful to declare any policy, particularly one that has not emerged out of an effective process, "non-negotiable".

In terms of our first objective of keeping the debate open, we are pleased to note that the Tripartite Alliance National Executives Summit (August 31-September 1) affirmed, in the official statement, that "no policy is cast in stone". Some two weeks later, and referring specifically to GEAR, President Mandela in his key- note address to the COSATU 10th National Congress, repeated the statement.

"No policy", he said, "is cast in stone." Comrade Mandela went further, he admitted that the process that produced GEAR did not effectively involve the ANC's alliance partners. Indeed, he added, even the ANC as a political party, was not properly consulted.

Of course, comrade Mandela was not renouncing the content of GEAR, but he was certainly affirming the legitimacy of a comradely debate within the ANC and its alliance on this (and all other) policies.

Our second objective as the SACP in regard to GEAR has been based on a concern that we were all in danger of falling into a neo-liberal trap. The SACP has been concerned that the GEAR debate was in danger of manoeuvring the entire alliance on to the terrain of our strategic opponents. While keeping the debate open, we have been concerned that this debate should not distract us from numerous other critical areas. We were running the danger, we believed, of falling into the neo-liberal illusion that macro-economic policy is the be-all and end-all of an economy, and of a society. We have been concerned that we were all, proponents and opponents of GEAR, tending to transform macro-economic policy into a theology. In particular, we have felt that we needed to redirect much of our energy on to a number of other critical policy and implementation areas ? industrial policy, job creation, and the transformation of the public sector.

Here, too, we are pleased to note that in a series of recent meetings ? the Alliance Summit, the COSATU Congress, and the ANC's preparatory workshop for its November Policy workshop - these latter issues are beginning to enjoy centrality. What is more, on industrial policy for instance, there are many innovative and extremely progressive policy perspectives and actual implementation processes beginning to be developed by comrades in government.

We believe that all of these developments are a strong vindication of the two objectives we set ourselves as the SACP in regard to GEAR. They also constitute a helpful rebuttal of those who tried to suppress our interventions, arguing that we were "rocking the boat", or that it was "irresponsible to disagree with government policy".

Reaffirming left perspectives
But it is not just the GEAR debate that, we think, has shifted on to a more constructive footing. More heartening still has been the resurgence in confidence in the assertion of left perspectives in our alliance. Nor are these assertions mere rhetorical flourishes.

The ANC's draft strategy and tactics document, "All Power to the People" (prepared for debate and eventual adoption at the ANC December National Conference) proceeds from a consistently progressive standpoint. No doubt, the document will be refined in the process of debate, but it is strong in affirming the working class bias that the ANC needs to foster. It also returns ANC policy discussion to a more consistent anti-imperialist outlook (without actually using those words). The document, for instance, notes that: "Today's world is dominated by the capitalist system. Besides, in the advanced capitalist countries, it is monopoly companies; particularly trans-national corporations which set the greater part of the agenda. As such, the real danger exists that political and economic policy of governments throughout the world can be dictated to by these corporations () Combined with this, is the danger that we can enter the new millennium with an approach to international relations that reflects capitalism's unbridled license, with particularly developing countries having surrendered their sovereignty."

Perhaps the most heartening of all developments over the past several months, from an SACP point of view, was the COSATU mid-September 6th Congress. It is a Congress whose significance, incidentally, seems to have escaped the understanding of the commercial media almost without exception. In the first place, the COSATU Congress resoundingly confirmed a trend that has been evident over the last twelve months or so. The old debate within COSATU, about whether the federation should be in the tripartite alliance or not, has been completely surpassed. The question is not whether there should be an alliance, but how to make it function better.

The COSATU congress did not have sufficient time to debate social and economic policy in detail ? this has now been referred to a new structure of the federation, the Central Committee with about 500 delegates, which will meet this November. However, the secretariat report to the Congress, the very extensive September Commission and several resolutions, have all contributed to the debate on taking the socialist struggle forward in South Africa. The invoking of socialism in COSATU is no longer (if it ever was) a vague general aspiration. Increasingly there are attempts to provide concrete content to the kind of socialism for which we are struggling in South Africa, and indeed to map out a programme of action, with socialist "building blocks". There is a striking convergence between these efforts and the strategic positions mapped out at the SACP's 9th Congress in 1994. We reprint, in this issue, the COSATU resolution on socialism to give our readers some idea of the general direction of emerging thinking in COSATU.

The left in our country needs, of course, to be constantly vigilant. We should never be surprised to find that there is an unceasing class struggle waged to undermine the trajectory and momentum of our April 1994 democratic breakthrough. In exercising vigilance, in asserting our own combativeness it is, however, equally important that we do not marginalise the left project in our country. Socialists are not a sect. We are determined to constantly affirm a left and socialist perspective as part of the mainstream of South African politics. In our concrete conditions this means constantly engaging our leading alliance partner, the ANC. Socialism is not a secret agenda. Socialism is not some conspiratorial "second stage", that the SACP and COSATU are quietly preparing.

A socialist outlook, a socialist programme, capacity for, momentum towards and elements of socialism are critical, right now, to the consolidation of our ongoing national democratic revolution. We are confident that a majority of comrades in the ANC broadly agree with this general perspective.

Socialism is as relevant as ever

The following is the address to the 6th COSATU Congress delivered By SACP acting national chairperson, Blade Nzimande.

Since the democratic breakthrough of April 1994, significant advances have been made by the broad liberation movement towards the total liberation of South Africa from an apartheid-colonial society, to a democratic society. The following are some of the major advances made: The formal end to white minority rule; the adoption of a broadly progressive constitution; advances in delivery in the areas of social needs like health, education, water and land redistribution; the progressive disintegration of the old apartheid ruling bloc, marked by, amongst other things, the crisis that is faced by virtually all the opposition parties

A critical component of this victory over apartheid has been the struggles and sacrifices made by the organised labour movement, particularly COSATU. The democratic breakthrough is a victory for organised workers who have the deepest interest in the deepening and consolidation of this phase of the National Democratic Revolution.

The character of the transition and the disintegration of the old apartheid ruling bloc The crisis being currently experienced by the opposition parties is first and foremost an expression of the disintegration of the old apartheid ruling bloc. The departure of Roelf Meyer and the resignation of FW de Klerk from the leadership of the National Party mark the deepest crisis within this party of apartheid and racism. Of course, Roelf Meyer?s departure does not mean a new opposition to the NP, but renewed attempts to try to dislocate the ANC and its Allies

The National Party is faced with an irreconcilable dilemma. On the one hand, it has to consolidate and retain its white Afrikaner base, whilst, on the other hand, it has to reach out to the majority of the black people of this country. It is impossible to reconcile the two, as the NP has to choose between being a party of the white privileged elite, or to abandon its racial character altogether if it is to be part of the emerging democratic order in South Africa

The IFP - that arch-enemy of the working class and progress in South Africa - is also faced with a similar dilemma. It is caught between being, on the one hand, a neo-feudal, rural based, bantustan, tribal party or being a modern, democratic party based on the principles of an open electoral democracy. The defeat of the apartheid regime has deprived the IFP of its main line of support, thus forcing it to rely even more on narrow tribalistic support in order to survive in a democratic South Africa.

The white right-wing has also been dealt a severe blow with the transition to democracy in our country. The demand for a volkstaat from these forces is nothing but an attempt to secure the white privileges accumulated under apartheid. The white right-wing hopes that by demanding a secluded volkstaat, it can still retain its own racist and exclusive haven for sections of white Afrikaners through which they can maintain their privileged positions.

However, the crisis in the ranks of the opposition does not necessarily and automatically translate into our own strengths. Nor do the current weaknesses mean that the threat of counter-revolution has completely receded. There still is a very real threat of counter- revolution, whereby elements of the old order might still want to undermine the emerging democratic order. The gains of our revolution cannot be said to be irreversible. Therefore there is a call for vigilance and the mass mobilisation of our people to defend the gains made by the national democratic revolution thus far. Organised workers have an important role to play, as they stand to benefit most from the consolidation and deepening of the National Democratic Revolution.

Current attempts at alliances by the opposition forces are nothing but an attempt by the old ruling bloc to reconstitute and reposition itself to undermine the transformation process.

Threats to the National Democratic Revolution The new global world order, after the end of the Cold War, is not necessarily conducive to the consolidation of the NDR. Globalisation, as characterised by the dominance of the capitalist system throughout the whole world, is based on the intensification of capitalist exploitation, and particularly the widening of the gulf between developed and developing countries. However, we should avoid two major mistakes when approaching globalisation. The one error is that of a right-wing, neo-liberal type, whereby the current global order is taken as a given within which developing countries have to fit themselves. That is, for South Africa, as a developing country, to simply become a "municipality" in this "global village".

The other mistake is that of an ultra-leftist kind. That is for us to merely act as if there is no international capitalist system that is dominant in the world today. Our task is to recognise the dominance of the capitalist market worldwide, whilst at the same time developing strategies and alliances to challenge the unjust and inequitable world order. This requires that we defend our national sovereignty and forge strategic alliances with other developing countries, in order to bring about a just and equitable world order.

However, the threat to the NDR does not only come from without, it could possibly come from within. The fact that the post-1994 situation is marked, amongst other things, by the swelling of the ranks of the middle and capitalist class - necessary as this is during the current phase - means that there is a very real possibility for sections of the previously oppressed to pursue the idea of a non-racial capitalist order, where a small section of the black people become part of the capitalist class.

The fact that thousands of our cadres have moved into positions of responsibility in government drastically swells the ranks of the black middle class. This development is to be welcomed, although it does pose its own potential dangers and a basis for the pursuance of a narrow, elitist path. Such a scenario could lead to the development of a 30%-70% solution, whereby thirty percent of the population is benefiting from a new capitalist order, and 70% remain outside. Such a scenario would not be sustainable, since the majority of the people will still be subjected to the same conditions as under apartheid, thus creating a very unstable political order.

Class struggles in South Africa?s transition to democracy All the above point to the intensification of class struggle during this period. The present struggles are essentially about shaping the nature and character of post-apartheid society and the post-apartheid state. The struggles during the writing of the new constitution, the lock-out clause, the LRA, and the current Basic Conditions of Employment Bill, are essentially about whether a post-apartheid South Africa will be a society or state where the interests of the bourgeoisie are dominant, or a society where the working class and its allies will be the dominant, if not the hegemonic force.

The capitalist class is trying by all means to use its economic power to shape the nature of a post-apartheid South Africa. Some of the key elements of the struggle by the capitalist class, together with anti-worker and anti-working class elements, include the the demonisation of organised workers and their struggles (calling them a ?labour aristocracy?), and endless attempts to insist that workers ?must sacrifice? in the name of patriotism.

We are yet to be convinced that the generally lowly paid workers of this country can ever be regarded as a labour aristocracy. Only yesterday, white workers were described as a labour aristocracy, now today the very same black workers that we all understood as being subjected to super-exploitation are referred to as a labour aristocracy!

This attack on organised workers also takes the form of presenting mass struggles by this section of the working class for the betterment of its employment conditions as being "counter-revolutionary" or "unpatriotic". Those who see this current phase of our struggle as an opportunity to get rich quickly under a legitimate government are threatened by the organised power of employed workers. Their demonisation of legitimate workers? struggle as "counter-revolutionary" is a cover for their own interests in exploiting the black working class in order to get wealthy as soon as possible.

It is interesting to note that those who call for organised workers to make sacrifices, under the guise of "patriotism", are not at the same time calling for the capitalist class to make sacrifices. The SACP completely rejects the notion that it is only organised workers who must make sacrifices for the reconstruction and development of our country.

The call for only organised workers to make sacrifices, without calling for the same from white monopoly capital, is essentially a reactionary call for the maintenance of the super- exploitation of the black working class. Business has not demonstrated how it intends facilitating the reconstruction and development of our country. Instead business argues that the intensification of capital accumulation will translate into the improvement of the conditions of the workers. This is a lie we must not accept.

A further attack on organised workers is that struggles against business are being projected as being anti-government. To argue that a general strike against capital is a strike against the democratic government is a deliberate distortion in order to continue to subject employed workers to the conditions under which they have suffered in the period of apartheid colonialism and its capitalist system.

Another attack on organised workers is the charge that employed workers are acting against the interests of the working class as a whole, particularly the unemployed workers. We are now being lectured that employed workers do not constitute the entirety of the working class. Both the SACP and COSATU understand this very well, and we do not need to be lectured to on this! We particularly do not need to be lectured to by those forces whose agenda is opposed to that of the working class. But organised workers are the leading detachment of the working class and have the organisational capacity and strength to lead the grassroots struggles of the working class

We are, however, yet to be told by those who argue this point as to how their actions are advancing the interests of the working class as a whole. In other words, the struggles of organised workers are being counterposed to that of the working class, without at the same time having any programme or commitment by the capitalist class to create more jobs. This argument, therefore, amounts to calling upon organised workers not to fight for the betterment of their employment conditions whilst at the same time unemployment increases.

The realisation of the goals of reconstruction and development is not going to come about through low-wages, but through the payment of decent wages and the establishment of decent conditions of employment as a key component of improving overall productivity and meeting the basic needs of the majority of the people of our country. However, by stating this position, we are not by any means suggesting that organised and employed workers should be insensitive to the position of the rest of the working class. If there are any sacrifices to be made, they must come from both sides, labour and capital. The SACP challenges business to demonstrate to us what plans they have to create jobs and invest in socially productive sectors in order to realise the upliftment of the immense majority of our people

At the core of these struggles and bursting out much more forcefully is the attempt to consolidate a post-apartheid South Africa as a capitalist country. It is important that organised workers and the working class as a whole, understand this reality so that our struggles to advance the interests of organised workers in the present period should be understood as part of a broader struggle against capitalism, and the laying of the foundations for a socialist South Africa.

A key component of attempts to consolidate South Africa as a capitalist society is the massive push by capital for the privatisation of state assets. As the SACP we are firmly of the view that private capital can never be able to address the basic needs of the majority of the people, even less so in a country like ours. There is no evidence whatsoever that private capital can address the scale of needs, inequalities and poverty characteristic of developing countries. Therefore, we should resist privatisation as a strategy for meeting the basic needs of our people.

Our call, and that of the Alliance as a whole, is for a strong, interventionist state and, where necessary, for such a state to strengthen and transform existing parastatals or, where necessary, to create new ones in order to achieve the goals of the RDP. We do not want a neutral or a regulatory state, but a national democratic and developmental state. The question is not whether to privatise or not, but how best to meet the needs of our people during a phase where capital is powerful and dominant.

The SACP is also concerned that the seemingly wholesale plunge by many local authorities into privatisation of the provision of many key social services is not being carefully thought through. The Alliance needs to review, as a matter of urgency, what is going on at this level

Similarly, the struggles around the basic conditions of employment are about whether we should be creating the type of conditions of employment conducive to a highly productive, decently paid workforce or about colonial-type working conditions to entrench cheap labour. The SACP recognises the fact that Basic Conditions of Employment Bill has many progressive elements, and is on the whole a progressive measure, in that it will mark a massive improvement of working conditions for millions of workers in the most exploited and backward sectors of our economy, like security services and large sections of the transport industry. However, what business wants is to roll back some of the gains made by organised workers in the various sectors.

Regarding GEAR, the government?s macro-economic policy framework. The SACP?s last central committee, after a year of reflection, discussion and debate, as well as interaction with Alliance partners, came out in opposition to GEAR. The Central Committee made the point that this kind of macro-economic framework is not conducive to the implementation of the RDP.

The Central Committee further noted that after one year, GEAR has led to the cut of the budget deficit in a manner that could seriously hamper social delivery. GEAR had predicted a 1,3% growth in jobs, but instead there has been a shrinkage, a job loss of 1,3% . Some of the leading proponents of GEAR have told us that it is on target, but this raises the question of what are the hard and soft targets of GEAR. If there can be job losses and the programme is still declared a ?success?, at what exactly is GEAR aiming?

So where do we go from here? Surely we cannot as an Alliance spend another year on the macro-economic debate. We believe that the last Alliance summit, and President Mandela?s own remarks to this COSATU congress, that no policy is cast in stone, set us on a new path to find one another on this question. The SACP therefore calls for the development of an industrial strategy aimed at identifying key industrial sectors for development. This must simultaneously address the basic needs of our people and create jobs. It is only within this context that we must develop a macro-economic model that underpins and strengthens such a developmental strategy. There is no example in this century of a developing country, or even a developed country for that matter, emerging from the ruins of war, from economic collapse or colonialism, achieving economic revival led by the capitalist market. Instead, such revivals have been led by a state-driven industrial strategy.

An industrial strategy should be premised upon the central RDP assumption that there can be no sustainable economic growth that is not centred on addressing the development needs of our country. Any macro-economic strategy therefore should be aimed at reinforcing such a job-creating industrial strategy, rather than the other way round.

The Tripartite Alliance The recent Alliance Summit was marked by a renewed commitment from all the allies to the continuation and strengthening of the Alliance. This is a correct stance. However, much more significant about this recent summit is that there are no sacred cows in terms of policy being pursued by government or any Alliance partner during this period. The view of the SACP is that this summit, much as there are still a lot of issues to be thrashed out together, has put us in a qualitatively new situation where key policy measures have to be taken jointly by the Alliance.

Whilst key differences remain around areas like Gear, this renewed commitment not only to the Alliance but to tackling problems and key policy issues together, puts the Alliance on a very firm footing in the right direction. Indeed, key policy issues and measures need to be jointly discussed, thrashed out and adopted by the Alliance

Those who want to see the Alliance breaking up, either for political or opportunistic reasons, are going to be disappointed. The reason why these forces want the working class and its organs to be separated from the ANC is because they ultimately want to weaken both the ANC and this government, thus frustrating the consolidation and deepening of the NDR. Those in the ranks of the Alliance who are calling for the break- up of the Alliance are playing right into the hands of our enemies.

The ANC is a broad movement that belongs to us all. The ANC equally belongs to the working class, organised workers and communists, just as it belongs to all other democrats who believe in the deepening and consolidation of the NDR. As workers, as the working class, as communists, we have all sacrificed to build the ANC and the realisation of the 1994 democratic breakthrough.

Tensions within the Alliance should not lead to calls for its break-up, but rather focus us on how we should strengthen it, including making the voice of the workers stronger within the ANC itself. This matter raises another related question that this Congress should debate. This is the question of what role does COSATU itself want to play in the ANC. Should COSATU leaders stand for election in ANC constitutional structures? Some of the affiliates point out that COSATU?s independence might be compromised. But at the same time the ANC needs to be taken seriously as our movement, even more so by workers and worker leaders, and how to have a workers? voice inside the ANC itself. The SACP urges COSATU to seriously debate this question

Socialism is as relevant as ever Both our detractors and anti-socialist, anti-communist elements are now asking us what we are talking about when we talk about socialism. We are being asked to define socialism, as if these forces do not know what we are talking about. There are also serious attempts to discredit the September Commission Report by either describing it as anti-ANC or for being vague about what it means by socialism.

The charge that we are vague about what we mean by socialism is nothing but convenient political amnesia. It is also a convenient ploy to say to us there is no alternative to capitalism In fact, some of those who pretend not to know what socialism means have not participated in the very rich post-Soviet Union debates about the renewal of socialism, but are rather stuck in their own erstwhile textbook Stalinist socialism.

There has been a very rich debate about socialist renewal, starting with Comrade Joe Slovo?s "Has Socialism Failed". The September Commission Report itself also engages us in a very creative way about the paths to socialism, including the creation of social capital and the building of a truly socialised economy where mass formations play a leading role in economic control and reconstruction.

Let us remind those doubters what we mean by socialism. Firstly, we mean the end to the ownership of the wealth of the country by a few monopoly capitalists, and for the key sectors of the economy to be in the hands of the actual producers, the workers. Secondly, by socialism we mean the end to the exploitation of the working class by a minority capitalist class. Socialism means an effective redistribution of a country?s resources under the custodianship of the working class and a state led by the working class itself. The fact that Eastern-European socialism failed, does not mean that socialism has failed. Rather it calls upon us socialists worldwide, and particularly in South Africa, to learn from those errors without departing from our goal of bringing capitalism to an end. Capitalism has also failed dismally. It has not managed to address the needs of the overwhelming majority of the people, and even more so in the developing world.

In order to attain our goals, the SACP is of the view that the struggle for socialism starts during this present period, not in some future. The consolidation of the NDR should lay the basis for a transition to socialism. Hence the SACP?s slogan "Socialism is the future, build it now".

Much more importantly, comrades, the achievement of socialism is not going to come about through endless theoretical debates in the centre pages of the Sunday Times or over the transmitters of the SABC - important as it is to debate on these platforms - but through concrete struggles by the working class and its allies to bring about this reality

Therefore our task is to go out and do agitational work amongst organised workers, the working class and the mass of our people. The consolidation of the NDR in favour of the working class and the bringing about of socialism depends on the balance of forces and the acceptance of socialism by the mass of the people on the ground. It is an organisational task. Socialism will not come about by us trying to endlessly convince those who cannot be convinced.

This calls for the organised workers to resolve once and for all to build the SACP as the political weapon of the working class. Organised workers cannot, on their own, take the struggle against the bosses to its logical political conclusion - the defeat of capitalism - unless organised and united as a political force, together with the rest of the working class. This further calls for a creative SACP/trade union co-operation as we have seen with political education activities between the Party and some of the trade unions. This, however, needs to be strengthened and deepened.

Much more importantly, all of us are faced with the need for fundraising and self- sufficiency. Union investments are important in this regard, but these should not merely be seen as fundraising efforts, but a strategic intervention in the economy, as well as the creation of social capital for the working class. These should also be used to strengthen and resource independent working class organisations, not least to assist in building a strong labour movement and the SACP as the political vanguard of the working class.

We therefore throw out a challenge to you all, comrades. Let us support the SACP?s all- important 10th Party Congress next year, if the SACP is to effectively play its role as the political vanguard of the working class. We need, also, to renew our efforts to build a single, independent and socialist labour federation in our country.

These are some of the tasks that face us in this COSATU 6th Congress.

Economic Policy in the Alliance

A Central Committee Discussion Document

Over the last year economic policy has dominated much debate within the tripartite alliance and broader mass democratic movement. In particular, there is a very widespread dissatisfaction with government's macro-economic policy framework - GEAR. It is a popular unease that is not confined to SACP and COSATU ranks, but is also prevalent within the ANC itself, notwithstanding the fact that it is official government and ANC policy.

In many circles, it is often assumed that the "RDP is dead". . Its "death" is associated both with the closure of the RDP Office in the Presidency, and especially with GEAR. These perceptions are, of course, not necessarily correct. Indeed, it is more important than ever before to assert the RDP vision and the core pillars of that programme. Unless the alliance forces intervene actively on this front, the general sense of confusion will prevail.

As the SACP we have not articulated a very elaborated or coherent position on GEAR over the past year. We need to do this in ways that facilitate the further elaboration of effective economic policy, and in ways that empower the mass base of our movement.

PROCESS
One of main problems with GEAR has been process, and this is one of the areas in which, as the SACP, we have been able to express our concerns in a consistent, and relatively coherent way. However, a clear understanding of the process around GEAR requires a brief review of the general background to economic policy-making in our movement over the last decade.

Some internal movement background
Prior to 1990, the ANC had no permanent economics think-tank, nor any relatively elaborated economic (or macro-economic) policy framework.

In the 1980s, within and around COSATU, there was some economic policy-making capacity - located essentially in Economic Trends (ET) and, in terms of key intellectuals, the overlapping Industrial Strategy Project (ISP). Given the trade union (and essentially oppositional character) of these networks, the focus tended to be on sectoral industrial policy. There was not much attention given to, nor capacity for, macro-economics.

After the unbannings in 1990, the ANC established a fully- fledged department of economic policy (DEP), and also, to enhance capacity, it helped to set up an NGO called the Macro- Economic Research Group (MERG), based to some extent on an earlier, London-based EROSA. MERG was later to be renamed National Institute of Economic Policy (NIEP).

In December 1993 MERG published an extensive economic policy document (Making Democracy Work: A Framework for Macroeconomic Policy in SA). It was a demand-led and internal infrastructural development proposal, which envisaged less immediate concern with budget deficit reduction and inflation. It also placed considerable emphasis on a clear industrial policy. The MERG document had some influence upon the original RDP (base document) perspective, but it was an influence that was watered down. Since April 1994, the MERG perspective was to find itself increasingly marginalised. Why? There are several explanations:

  • There were other influences upon the ANC - including those intellectuals drawn more from the ET/ISP networks, who, without necessarily directly opposing the MERG perspective, were more focused on sectoral industrial issues, rather than a broader macro-economic or even industrial policy. Since April 1994, some intellectuals from ET/ISP have emerged as important role-players within the government administration, joining many former technocrats in key ministries, parastatals and as influential consultants.
  • There were also powerful external forces operating on the ANC and new democratic government, seeking to hold the RDP objectives hostage to their own macro-economic concerns.
  • There were weaknesses within MERG, including its over- reliance on outstanding but UK-based academic economists, who, while bringing many skills into the process, were unable to be present in South Africa much of the time. They were not able to buttress their own perspectives in the cut and thrust of political debate here.
  • MERG also neglected to connect with political formations like the SACP, (and, except belatedly, the SACP also neglected the MERG project). From all sides there was a failure to appreciate the importance of involving broader political constituencies in an understanding of macro- economic challenges.

    We are not arguing that the MERG perspective was necessarily all correct and the GEAR perspective is all wrong. What we are noting are some of the internal movement reasons for the relative absence of an effective macro-economic DEBATE within our ranks. The lack of such a debate is one of the prime causes for the present high levels of uncertainty and dissatisfaction with GEAR.

    These specific reasons for the failure of debate were, of course, compounded by the seeming complexity of macro-economic matters, and the general lack of confidence that a great deal of our leading cadres feel on this front.

    1994-1995, the RDP and macro-economics

    The RDP Base Document, while it contains many macro-economic implications, does not attempt to spell out a broad macro- economic framework - in many ways, it camouflages the unresolved macro-economic debate behind ambiguity. The opponents of the RDP outside of our movement - basically big busines - were not slow to recognise this, and they have continued to chip away at this fault-line.

    The RDP Green Paper of 1994 (which disappearred as quickly as it arrived) was the first unambiguous attempt by economists based at the Development Bank of South Africa (DBSA) to encase the RDP within a neo-liberal macro-economic framework (export- led growth and trickle-down development). The RDP White Paper (September 1994) was less crude than this, but, compared to the base document reflected a shift towards some of these neo- liberal macro-economic premises, while still seeking to hold on to the key social and developmental objectives of the RDP. The National Growth and Development Strategy (NGDS) had a similar character. In terms of public reception, both the White Paper and the NGDS failed to enthuse either:

  • the ANC's constituency - which, insofar as it was even aware of these documents, was worried that they were "watering down" the RDP; or
  • big business circles - which felt that a clear neo- liberal macro-economic statement was still being encumbered by the simultaneous reiteration of RDP developmental objectives. Business circles maintained heavy pressure for a "clear" statement of macro-economic policy.

    December 1995 to June 1996 - the preparation of GEAR
    A small team of economists was assembled, in December 1995, by the then Deputy Minister of Finance, to begin work on a Macro- Economic policy. The team had one or two economists with a broadly progressive background, others were drawn from the universities and from places like the DBSA.

    Between mid-January and mid-February 1996 the value of the Rand relative to a basket of leading international currencies fell by over 20 percent. It is not clear that this fall was deliberately precipitated (the original spark seems to have been a report in a German financial magazine suggesting that the Rand was overvalued). However, business circles (who had been suggesting that the Rand needed to be devalued in any case by some 20 percent - see the SA Foundation's Growth For All document) seized the opportunity to intensify pressure on government. The "lack of a clear macro-economic" policy was continuously cited as the underlying reason for the Rand's fall.

    This episode (there was to be a second fall and then minor recovery of the Rand, in the following months) may have added to the sense of urgency, and to the style with which the GEAR task team set about its work.

    In June 1996 GEAR was finally unveiled. In the ten days before its unveiling, key economics ministers had three meetings with the SACP and COSATU national leaderships. The alliance partners were given a very general executive summary of the GEAR document. The sensitivity of the policy was stressed, and a constructive, "responsible" engagement with GEAR was requested, rather than a mere rejection. Both SACP and COSATU leaderships expressed misgivings about the very late nature of the consultation, and about the general vagueness regarding the contents. A contrast was made with the very broad-ranging and consultative process that underpinned the RDP base document drafting.

    Nonetheless, in its first public reaction to GEAR, the SACP welcomed certain positive features, including:

  • GEAR's commitment to the RDP, locating itself as a macro-economic framework for the RDP (and not opposed to it);
  • the commitment to the National Framework Agreement on the restructuring of state assets - as opposed
    privatisation for its own sake.
  • COSATU was more critical from the outset.

    For its part, big business and the leading, pro-business (they mostly are) newspapers heralded GEAR. It was presented as a U- turn in ANC policy, as the death-knell for the RDP's "economic populism", and the imminent break-up of the tripartite alliance was predicted in several quarters. There was a great deal of goading by these forces, directed at the SACP and COSATU. The management of the process within our alliance was not helped by repeated statements from the side of government that GEAR was "not negotiable".

    THE MAIN FEATURES OF GEAR

    *Budget deficit reduction

    At the heart of GEAR is a deep concern about the government's budget deficit. Cynical spending, partly on security and partly on buying patronage, by the apartheid regime in its latter years, has encumbered the new government with a serious budget deficit difficulty. The actual percentage budget deficit to GDP (now around 4%) is not at all high by international standards, above all for a developing country seeking to launch a developmental growth cycle. However, what makes the budget deficit particularly onerous are the interest rate levels - which determine what the government has to pay back each year on the borrowing made against the deficit. With a very high bank rate and with inflation just under 10%, government is having to pay a heavy interest rate of around 17% on the deficit. Put concretely, for every R1 collected in revenue by government, more than 20 cents goes straight out again to cover the interest.

    What do we do?

  • GEAR proposes a fairly drastic reduction of the budget deficit down to 3% by 2000. At the same time, it also seeks to bring down interest rates over the five-year period. GEAR argues that we cannot be complacent about the budget deficit, unless we take reduction seriously, it will escalate out of control and we will find ourselves in a serious debt trap.
    Are there alternatives?
  • NIEP-aligned macro-economists argue that a slightly more generous attitude towards the budget deficit is possible and essential if any sustainable growth and development is to occur. Their argument is for less stringency now.
  • Can we not just renounce, or re-negotiate, this "apartheid" debt? This view has been articulated by some NGOs and also by the new Anglican Archbishop. Against these views, pro-GEAR comrades have argued that:
  • the debt is (thankfully in some respects) largely an internal debt, owed to the pension funds. Any renunciation would deprive many working people in our country of their pensions. Progressive NGOs are in the process of further research on these questions, and, while the results of their research are not yet complete, they are starting to point out that there may yet be more room for manoeuvre. On the one hand, the internal character of the debt is exaggerated by he fact that pro-GEAR economists are not taking into account the debt of the parastatals - which is substantial, and which is much more external than the more specific, government budget deficit. The the research of the progressive NGOs is also beginning to suggest some manoeuvrability on the internal debt...this is an area to be watched in the coming period.

    Can we not drastically reduce interest rates, without worrying too much about the percentage budget deficit? The added attractiveness of this argument is that exceptionally high interest rates are, in any case, seriously hitting job-creation, housing development, and small and medium businesses.

    GEAR proponents argue that they are, indeed, committed to drastic interest rate cuts, but that this is not that easy - the main problem being vulnerabilities in the financial markets, particularly our foreign currency reserves. These were down to a few weeks of reserves in the weeks before April 1994. The situation has since improved, but the foreign currency flows into our country, at least until fairly recently, were overwhelmingly short-term, portfolio investments attracted, precisely, by the high interest rates. This is very nervous and free-floating money, which can leave a country in a matter of hours. There has, however, since been an improvement in the FDI (foreign direct investment into the productive economy) and this may help bring down interest rates.

    If we are to pursue a more effective interest rate reduction strategy, it is clear that we shall have to intensify pressure on the Reserve Bank and its arch-conservative governor, Chris Stals. Stals continues to identify inflation as the main enemy in South Africa, in an incredibly narrow, monetarist way.

    We have devoted some time to the budget deficit reduction programme in GEAR because, in many ways, this is the heart of GEAR. The SACP CC is not suggesting that there are easy answers on this front, but the debate around alternatives must, absolutely, be kept wide open. The other major planks of GEAR include:

    * Restructuring of State Assets

    In which there is a great deal of ambiguity:


    On the one hand, there is a continuing commitment to the National Framework Agreement of February 1996 (with its prioritisation of service delivery and job creation) and the bilateral (governement/trade union) negotiations process; On the other hand, there is a whole lot of fluffy rhetoric about the new government's commitment to privatisation.

    These ambiguities are fairly typical of much of GEAR, it seems to be speaking out of two sides of its mouth, and winking now at one, now at another constituency.

    *Fairly conventional Monetarist policies - including the identification of inflation as a principal concern.

    Growth policy - GEAR is very much premised upon a private-sector driven (public sector facilitated) growth, which is largely export-oriented. It is also considerably a growth first, development after approach.

    * Trade liberalisation

    - with some ameliorating commitments to retraining of workers;

    * A Social Accord - which is, again, extremely vague.

    Insofar as any general direction is alluded to, it seems to involve wage restraint from unions in exchange for price restraint from the private sector and a larger social wage from government.

    THE PERFORMANCE OF GEAR AFTER ONE YEAR

    Obviously it would be unfair to draw too many quick and facile conclusions on the basis of just twelve months of GEAR. On the other hand, much of GEAR was, in fact, being implemented before the unveiling of the framework. There are reasons, then, to at least note some key indicators of where things might be headed.

  • on the budget deficit reduction, the latest government budget is generally on target with goals set by GEAR although there is some creative statistical packaging happening, including the non-recording of parastatal indebtedness in these figures;
  • growth was projected to be 2,9% this year. It is now likely to be less than 2,5%. The SACP CC does not think that quantitative growth on its own (in the absence of key indicators on development) is necessarily of overriding importance. However, given the centrality of growth to GEAR this slowing down of growth recovery could be serious. Down-turn in agriculture appears to be the main reason.
  • job creation - this is the area of greatest concern. GEAR projected a modest 1,3% increase in jobs over the past year. The figure appears to be a 1,3% loss in jobs, instead. Once more we have had (low) growth, but jobless growth.

    We should not assume that failures to meet certain key targets will lead, necessarily, to a progressive revision of GEAR. Business and others will argue that, for instance, job loss is because we have not applied ENOUGH of the austerity and flexibility medicine. However, the critique of GEAR made by reality itself does help to open the debate on the macro- economic policy, provided there is a progressive engagement in the debate.

    PROCESSES WITHIN THE ALLIANCE SINCE THE UNVEILING OF GEAR IN JUNE 1996

    In the months following the unveiling of GEAR, COSATU was increasingly outspoken in its criticism of the policy. We have now reached the stage where, in much of COSATU, there is a blanket rejection of GEAR, captured clearly in COSATU president, cde John Gomomo's NEDLAC speech.

    The SACP has, generally, been less outspoken on GEAR than our comrades in COSATU. We have felt that we needed time to collectively assess and debate GEAR. Thus far we have tended to focus largely on process. The SACP CC believes that we now need to take our concerns further. We believe that some of the overall assumptions of GEAR are themselves seriously flawed, and that a substantional review of macro-economic policy is essential.

    Attempts to manage the problem within the alliance

    * The informal government-COSATU bilaterals

    In the course of the second half of 1996 there was a series of meetings convened by the Deputy President, and involving key ANC ministers and key COSATU leaders. The talks were informal, but were designed to locate GEAR within a broader political, social and economic context.

    The process produced the State and Social Transformation document. While making some important points about the budget deficit, the paper is weak in its overall conception of our strategic direction as a movement (see our December 1996 CC discussion), and has failed to receive clear endorsement from the ANC, let alone COSATU.

    * The Alliance summit of April 10 1997

    Against the general background above, the alliance secretariat convened a tripartite executives summit on April 10 1997. The SACP and COSATU, in three preparatory meetings, two involving the officials of the alliance, had insisted that GEAR needed to feature on the agenda of the summit. Unfortunately, the ANC delegation did not effectively lay the basis for any discussion of GEAR at the summit. In order to ensure that this does happen, the summit resolved to bring forward the date for the next summit to June 1997 (it will now take place in August), and there will be an attempt to produce of common alliance discussion paper for this summit.

    * ANC Policy Department

    Following the ANC NEC January lekgotla, an NWC member has been appointed to co-ordinate overall ANC policy-making. There have been two meetings of this structure, and the objective is very much to include the alliance within processes - this can be another channel for managing more effective alliance economic and macro-economic policy- making and debate.

    STRATEGIC WAY FORWARD

    From the side of the SACP we have been discussing in an ongoing way how best to carry forward the macro-economic and broader economic debate. Several components of a strategic way forward have begun to emerge from these discussions within the Party.

    * Strategic engagement with GEAR

    For many reasons, GEAR has often been demonised. It is blamed for everything, even when other factors are more evidently at play (mismanagement, for instance). It is important that we do not allow this "lazy" rejectionism to take hold. GEAR requires unpacking, and, as suggested in the paper "Engaging with GEAR: A contribution by the Western Cape SACP", we need to buttress those features of GEAR which are positive - lowering of the bank rate; threefold increase in parastatal investment growth; commitment to the NFA; commitment to RDP delivery goals.

    This kind of strategic engagement with GEAR should not, and cannot, simply await a complete review of macro- economic policy.

    * Keeping the macro-economic debate open

    However, strategic engagement with GEAR does not mean that we should simply confine ourselves to tactical manoeuvring within the broader framework of GEAR. We have been concerned to consistently keep the debate open, and to set an example in this regard. We have encouraged comrades, and our alliance partners not to be intimidated by "non- negotiable" declarations. The time has come to interrogate much more robustly the macro-economic premises upon which

    GEAR is based. In particular, we believe that GEAR has moved away from the RDP vision of a deep interconnectedness between growth and development. Although it is ambivalent, at the end of the day, it is a growth first, trickle-down development second approach.

    * But let us also not get fixated with macro-economic debate to the detriment of many other essential issues in economic policy-making

    In particular, the SACP has consistently called for:

    *a Jobs Summit. Such a Summit is now being planned for October this year. However, we need to be careful that it is not used by business (and perhaps even elements in government) to delay progressive legislation (like the Employment Standards Bill). There is a danger that a Jobs Summit will be used by business to push for labour market flexibility. The COSATU call for an alliance summit first on jobs is absolutely critical in this regard. A broader Jobs Summit on its own might be used to delay progressive legislation and to manoeuvre government into an arbitrating role between business's demands for flexibility and labour/progressive demands for a job strategy that is led by the public sector and by a clear government development and industrialisation strategy.

    *a clear Industrial Strategy. One of the great weaknesses of GEAR, and of much of our other economic policy-making, is that it has not been built around a coherent industrial strategy. At present, industrial strategy appears to be little more than diversification out of "primary" industry, by making the manufacturing sector "more competitive", through liberalisation and incentives.

    We believe that there is not a single example this century of a society emerging from underdevelopment where a clear industrial policy has not been at the very centre of development strategy. This applies to the initial successes of the former Soviet Union, to the Peoples Republic of China, and to the very different examples of South Korea and Taiwan. We are not arguing that any of these are blue-prints that we could (or should) narrowly apply. But the only escape from underdevelopment this century has been around a coherent, state-driven industrialisation strategy. No third-world country has developed merely on the basis of macro-economic signals, on the basis of creating an "investor friendly" environment.

    What are the general directions for a more coherent industrial strategy? They include:
    breaking away from a simplistic "primary"/"secondary" industry approach. The engine of accumulation and development in the South African economy has been and remains a minerals-energy complex that straddles both "primary" and "secondary" sectors. It is by constructing a more coherent strategy of linkages between the core minerals-energy complex and further industrial development that we will build upon our national strengths, and that we will be able to launch a sustainable industrial policy. The idea that all of "secondary" industry in South Africa has been built up behind unsustainable tariff barriers is not true for the key mineral-energy complex. But from this distorted reading of our industrialisation, it is assumed that, in order to become competitive to sustain an export-led growth, we must allow the cold winds of trade liberalisation to blow through our manufacturing base. This will supposedly, on its own, sort out the "competitive" from the "non-competitive".

    * breaking away from simplistic "state" versus "market" notions. Once more, it is the key linkages between state-driven industrial policy, the effective and productive use of the budget and the public sector and the harnessing of private sector resources that is essential. It is hoplessly inadequate to see the role of the state in industrial policy as largely hands-off, doing little more than offering some supply-side incentives to the private sector along with generally creating an "investor friendly" climate. This is not going to work.

    * placing greater emphasis on national and southern African regional infrastructural development. This is a question of emphasis, it is not a matter of a mechanical and equally one- sided opposition to the one-sided stress on export-oriented and led growth.

    disaggregating private sector interests. We believe that what is often most vociferously presented as the "voice" of the private sector represents, in fact, fractions of capital that are more rooted in financial speculation, brokering privatisation deals, or in international dependencies, and less rooted in the real economy. Without exagerrating, we believe that many of the ideas presented above will not be met with hostility by all sections of private capital.

    A clear and coherent industrial policy needs to inform many other areas of policy-making - from spatial planning, through education policy to the role of the public sector and the appropriate macro-economic framework for our country. So long as there is lack of clarity on industrial policy, many other areas of policy-making will be guided by all kinds of confusions. For instance, a recent draft (since amended) of the Higher Education Bill (a version drafted by World Bank consultants) asserted, without any other qualification, that the role of tertiary education in SA was to make our country internationally competitive on the global market.

    Above all, if we are to emerge, as an alliance, from the current impasse around the GEAR debate, we must put in place a clear and coherent industrial policy. Unless we do this, the economic debate will be dominated by macro-economic metaphysics.

    COSATU Congress resolutions

    The COSATU 6th Congress, held in mid-September, produced an impressive array of resolutions. We reprint three of the resolutions which we believe may be of special interest to readers of the AC..

    THE STRUGGLE FOR SOCIALISM

    1. The political transformation in our country has presented us with new challenges and new points of struggle.
    2. One of the challenges that faces COSATU presently, is to concretely translate its commitment to socialism into a practical and understandable programme.
    3. While this is clearly no easy task, our commitment to socialism is unwavering.
    4. The main strategic opponent of the working class has always been, and still is, domestic and international monopoly capital.
    5. In South Africa, we are faced with a nominally democratic state where economic power is still largely in the hands of a minority.
    6. The political arrangement that presently exists is a compromise born out of complex forces involved in the transition to democracy and not necessarily the ideal outcome for the working class and the disadvantaged.
    7. As a federation our ultimate objective is transfer of political and economic power to the working class.
    8. In line with this objective, COSATU re-affirms its commitment to the struggle or a socialist society.
    9. COSATU must develop strategies that engage both the state and capital for the improvement of the material conditions of the majority, while developing a long-term vision of a socialist society.
    10. Our policies, both in the short and long-term, must be underpinned by our ideological vision of a socialist society and the creation of a socialist state.

    11. What this means is that COSATU has the responsibility to begin building socialism now. The federation needs to fight for building blocks towards socialism. Such building blocks should include:

    11.1. engaging in relentless criticism of capitalism
    11.2. strengthening working class organisations
    11.2. fighting for a powerful role of the public sector
    11.3. experimenting with non-capitalist forms of ownership and notions of social capital (communally owned companies)
    11.4. introducing new socialist forms of work organisation and management which advance worker control.
    11.5. developing working class hegemony on issues such as sport, culture values, the media and politics.
    11.6. emphasising the concept of equality and ending all forms of discrimination and oppression, particularly that affecting women.
    11.7. demanding that the state begin to play a developmental role.
    11.8. reducing higher echelons of bureaucracy
    11.9. creating a more responsive state administration
    11.10 moving beyond traditional notions of capitalist democracy and introducing participatory forms of democracy.
    11.11 building accountability of government, of companies, of financial institutions, of pension fund investors, and of managers.

    12. For the above measures to be real building blocks towards socialism, they need to be located and form part of a broader socialist programme.

    13. Such a programme needs to outline in detail:

    13.1. The nature and type of socialism that we are fighting for
    13.2. The strategy and tactics to be used to realise our socialist objective.
    13.3. Short and long-term demands of the working class to be used in the march toward socialism.
    13.4. The social forces that will play a crucial role.

    14. While COSATU must play a role in the formulation of such a programme, such a task is not only for the federation, but a mission for all socialist forces.
    15. As recognition of the role that must be played by socialist forces outside of the Federation, COSATU should develop links with credible socialist
    organisations nationally and internationally in order to challenge capital on a global front.
    16. We also need to increase the depth of our relationship with the SACP as a political party with a socialist vision.
    17. In deepening the relationship withbthe SACP, COSATU,should provide resources that will help strengthen the SACP and transform it into a formidable force capable of meeting the challenges and leading the struggle for socialism.
    18. COSATU should further establish party units in the workpalces and strengthen the SACP branches where they are weak and help and build new ones where it does not exist.
    19. With the SACP, COSATU should develop mass media instruments (papers, programmes etc.) which give an alternative view of society, international issues and provide an outlet for socialist intellectual debate
    20. As a way of developing a socialist programme, COSATU should internally educate and mobilise the working class about the importance of their role and contribution in realising socialism. Within COSATU and its affiliates this could take the form of Socialist Forums at local level.
    21. Once a socialist programme has been developed, COSATU and SACP must discuss and jointly develop a broader programme for taking us to socialism. Such a programme could include joint programmes of action, continuous discussion, education fora and move towards a Conference of Left with the ANC as one of the partners.

    THE TRIPARTITE ALLIANCE

    1. COSATU must take forward the recent decisions of the Alliance Summit which agreed that the there should a broad agenda for transformation which must deal amongst others with:

    • The form and content of a joint Alliance transformation programme
    • The alliance approach to policy formulation
    • The relationship between the alliance and government
    • Our vision for transforming the public sector

    2. This will provide the basis for engagement to continuously shift the power balance in favour of and to prepare properly to marshall the democratic forces victory in the 1999 elections.
    3. Despite the shifts on the part of the ANC in government and despite other obvious weaknesses of the Alliance, such as the lack of a common program, lack of accountability and co-ordination , the ANC-COSATU-SACP alliance remains the only vehicle capable of bringing about fundamental transformation for the country.
    4. More than ever before, COSATU should maintain and strengthen the Alliance with the ANC and the SACP.

    5. Together with the policy of maintaining the alliance, the Federation needs a plan to revitalise the Alliance. Such a plan must entail:

    • Developing a clear transformation programme for the Alliance
    • Regular summits to co-ordinate and guide the activities of the Alliance
    • A strategy of how to rebuild the Alliance at all levels and to promote the culture of democratic decision making
    • Establishing an Alliance political centre to be co-ordinated by the Alliance leadership
    • To provide the resource to the components of this alliance and to ensure effective functioning of all constituent organisations of the Alliance

    6. The common programme of the Alliance must be based and built on the RDP. It must centre around the delivery of basic needs of our people, particularly those in the rural areas.
    7. COSATU and its affiliates should consciously organise workers to engage in the structures of the Alliance as all levels to ensure working class bias in the programme and policies of the Alliance prevail.
    8. While COSATU should remain committed to the alliance, such commitment must be coupled with vigorous defense of the federation's political independence. Partners must fearlessly but constructively criticise each other.
    9. The CEC must be empowered to review from time to time the workings of the Alliance.

    10. An election platform must be developed at Alliance level for the 1999 elections to amongst others cover the following areas:

    • Providing financial resources
    • Agreement on the candidates list process
    • The key policies for the election manifesto
    • Electioneering support for the ANC at workplace and in communities
    • Implementation and review structures in regard to policies of governance

    11. COSATU should convene a Central Committee in 1998 to finalise and endorse a proposal for the platform.

    COSATU POLICY ON DEPLOYMENT

    1. The need to influence and ensure that the workers voice is within the Alliance structures in the true sense. That we need to ensure that any COSATU office bearer at whatever level can stand for the ANC's NEC election
    2. That this deployment should be part of a broader strategy for working class ascendancy within the ANC. That this can also happen in full-time functionary position of the state apparatus for enabling the transformation of the state.
    3. That we cannot deploy comrades into full time positions on the NEC and hope to retain the comrade on a full time basis in COSATU.
    4. We must note the critical need for us to be independent and thus able to criticise our alliance partners in the situation where we need to.

    Intellectuals and transformation

    In this paper, which was presented to the Southern African Sociologists Association Conference in August this year, Langa Zita- SACP National Co-ordinator, delineates a number of left intellectual currents in South Africa. In particular, he looks critically at the left current that played a key role in, and crystallised around, the re-emergent trade union movement in the early 1970s.

    What is an intellectual? Edward Said writes of the intellectual that he or she ?is an individual endowed with a faculty for representing, embodying , articulating a message, a view, an attitude, philosophy or opinion to, as well as for, a public. And this role has an edge to it, and cannot be played without a sense of being someone whose place it is publicly to raise embarrassing questions, to confront orthodoxy and dogma (rather than to produce them), to be someone who cannot easily be co-opted by governments or corporations and whose raison d? etre is to represent all those people and issues that are routinely forgotten or swept under the rug The intellectual does so on the basis of universal principles: that all human beings are entitled to expect decent standards of behaviour concerning freedom and justice from worldly powers or nations, and that deliberate or inadvertent violations of these standards need to be testified and fought against courageously.?

    I agree with Said?s emphasis on the need for the intellectual to be prepared to confront orthodoxy, and with the humanism that he would like to see in the intellectual. But I would also want to add that the progressive intellectual should be rooted in the struggle of workers and popular forces. In the context of a socialist vision this requires a deliberate commitment to the transcendence of capitalist relations and the creation of a radical democratic society. It is in this particular context that I intend to examine South African left intellectuals and their engagement with the political transition from apartheid to representative democratic rule.

    The historical delineations of the South African left While there are a number of progressive South African intellectual currents (including Africanist and Black Consciousness traditions), it is with intellectuals currently or historically related to the socialist tradition that I wish to concern myself here. Even within the socialist tradition I will not attempt to do justice to the full spectrum. The groupings that I will focus upon are the ?historical Leninists? (intellectuals within the SACP who have emerged from a largely Leninist legacy), and the 1973 group of intellectuals, sometimes referred to (usually by their left-wing opponents) as ?workerists?. It is essentially these two groupings that come to mind if we are to examine the Left intelligentsia in the South African transition. This is because, as opposed to the other left groups, it is these two groups who have substantial roots amongst the popular forces, in particular the working class. Furthermore both groups have a significant presence within the liberation movement, in particular within the ANC ? although, in the case of the ?workerists?, this is a quite recent development.

    There is one further left grouping of intellectuals with a presence within the ANC. These are former SACP members, who left the party in the early 1990s, but who have, in some cases, not abandoned their intellectual training, and strategic left-leaning skills.

    The communist party intellectuals Since its inception in 1921 the SACP has always made a critical, strategic and theoretical contribution to the left project in South Africa. Because of its anti-colonial thesis, the party saw its contribution as historically part of the ANC-led liberation front. Over the years SACP trained cadres were acknowledged as among the best cadres of the liberation movement because of their discipline and their theoretical clarity. It was partly because of these qualities, and partly because of the prestige of the Soviet Union in the context of the Cold War polarisation of conflicts, not least in Africa, that the theoretical perspectives of the party were, perhaps, hegemonic within the ANC in the 1960s, 70s and 80s.

    The crisis of the Soviet bloc, and the changed global realities of the late 1980s and 1990s, created new circumstances. The intellectuals who remained within the SACP in the 1990s did not renounce socialism or the broad legacy in which they were formed, but neither did they cling to the ?certainties? of orthodoxy. In dealing with the challenges of the new situation, the party sought to open up a debate on the meaning of socialism. The party also strongly identified the threat of neo-liberalism. The party continues to present perspectives broadly within a left interpretation of radical reforms, and the strategic framework of building socialism within the context of the unfolding democratic revolution.

    ANC Thinkers Whilst it would be incorrect to paint every one who left the SACP with one brush, the emergence of a group of thinkers outside of the SACP, predominantly African, has to be noted as one of the interesting features of the liberation movement in the 1990s. With the exception of the present debate on the African Renaissance, and an intervention on the ANC as a potential anti-capitalist movement (during the debate on the future of the alliance sparked by NUMSA) these thinkers have not expressed publicly any significant views relating to an alternative post-capitalist society. For this reason, an assessment of their contribution with regard to a left project, (defined as meaning a pursuit of a post-capitalist society) is not undertaken in this paper.

    The 1973 white intellectuals The 1973 Durban strikes had a lasting impact on South African history. They heralded the emergence of the contemporary working class movement. Importantly for our purposes, the strikes enabled the consolidation of a group of, predominantly white, radical students who aligned themselves with the re- emergent Black working class movement. This group of courageous young people became an important intellectual resource for the working class movement. Influenced also by the student uprisings of 1968 in Europe and North America, they had reservations about the pro-Moscow line of the SACP, and immersed as they were in working class struggles, they did not trust the ?petty bourgeois?, nationalist leadership of the ANC. This was part of a general failure, on their part, to appreciate the centrality of the national question in the South African class struggle.

    In the course of the 1980s, the clear hegemony of the ANC and the support it commanded from the majority of South Africans, threatened the influence of the 1973 group amongst the working class. At the beginning of the 1990s, the support enjoyed by the ANC was even more apparent. Thus many of the more influential members of this group began to rethink their relationship with the ANC. This reassessment occurred, however, not under conditions of strength, but in a situation of relative weakness for this group. The changed global balance of forces, the crisis of socialism, and the group?s own weaker presence amongst the popular forces ? all meant that this grouping felt it could ill afford to negotiate a relationship with the ANC on the basis of a radical programme. This may not have been self conscious, but it happened.

    Yet this grouping had the capacity to have developed a left wing approach to the challenges of globalisation. In a forgotten essay, one of the leading thinkers of this group outlined the following response to South Africa?s economic malaise:

    ?In a nutshell, a market-dominated capitalist economy cannot alleviate or eliminate mass unemployment and poverty. If we look to a planned socialist alternative we must carefully absorb the experience of the Soviet command type economy. This means creating a democratically planned economy which goes beyond simplistic notions of nationalisation. More complex ownership structures are necessary - ranging from nationalisation, to state-capital partnerships, to worker controlled enterprises, cooperatives and to private enterprise. Such an ownership structure will be within a democratically established plan to undertake the necessary restructuring of production? (Work in Progress , no.61 1989).

    This robust and radical response was to be increasingly down-played in favour of Keynesian solutions.

    Trade Union Limits to Macro-Economic Management Partly reinforcing the slide to the centre was the victory of the 1973 group in the arena of economic policy formulation within the ANC. This took the form of the ascendancy, both in terms of personalities related to the COSATU- aligned Industrial Strategy Project (ISP) to key levers of power, and the relative marginalisation of the Macro-Economic Research Group (MERG), which had, historically, been more rooted within the mainstream of ANC economic policy formation. Because those in the ISP group were primarily trade unionists, they tended to see macro economic management as essentially negotiated, whether it was through Nedlac or Industry forums. The logic of this framework was a timid understanding of the role of the state and of public ownership.

    Mapping out the implication of the transition, theory as the justification of a righwing shift Because the ideological changes that were being made were fundamental shifts, they had to be theoretically justified. In this process of justification, there was a particular reading of the concept of ?structural reforms? - a revolutionary notion developed and popularised by, amongst others, Boris Kagarlitsky. This particular reading was partly the result of ambiguity in the concept or, at least, a tension between two dimensions of the concept. On the one hand, structural reforms can be defined, essentially, as the democratic transformation of property and productive relations. On the other hand, structural reforms are sometimes understood in a much more general way, as a process of generalised democratisation

    Both of these versions of structural reform are present in Kagarlitsky. The more radical version emerges clearly when he argues: ?While traditional social democratic reformism confined itself to changes in the sphere of distribution and indirect regulation of the economy, strategic revolutionary reform has to affect the spheres of property and the organisation of production.?

    But there is also a more generalised democratising perspective in Kagarlitsky, drawn in the main from Andre Gorz. Here, structural reform is identified less with specific strategic objectives, and more by the kind of process that it is. Kagarlitsky argues for two essential criteria for distinguishing ?structural reform? from mere ?reformism?. The first is the insistence that any reform, to be structural, must not be comfortably self contained (a mere ?improvement?), but must, instead, be allowed to self- consciously implicate other ?necessary? reforms that flow from it as part of an emerging project of structural transformation.

    The second distinguishing characteristic, according to this line of argument and neatly captured by John Saul, is that ?a structural reform cannot come from on high; instead it must root itself in popular initiatives in such a way as to leave a residue of further empowerment - in terms of growing enlightenment/ class consciousness, in terms of organisational capacity - for the vast mass of the population, who thus strengthen themselves for further struggles, further victories?.

    There is no doubt that these are useful ways of proceeding, in as far as they define structural reforms as a continuing process and in as far as they locate mass involvement at the centre of this process. But to the extent that this conceptualisation does not specify key and concrete objectives in this scenario it remains susceptible to various interpretations. I want to argue that, in the South African case, the content given to Kagarlitsky?s idea of revolutionary reform has been somewhat timid.

    Radical Reforms as synonymous with social democracy Two major interventions by leading thinkers broadly within the traditions of the 1973 group exemplify the shift from a radical alternative vision to some undefined democratisation at best, and at worst to an accommodation with capital. From toying with the concepts of radical reform of Kagarlitsky, Eddie Webster went on to embrace Castenada?s third world social democracy as the be-all of macro-economic perspectives.

    Similarly, in elaborating his concept of strategic unionism - Karl van Holdt essentially sees the development of a nuanced social democratic corporatism as the ultimate possible outcome of the South African transition.

    ?Strategic unionism is a strategy for a far reaching reform of the state, of the work place, of economic decision and of civil society. It is a strategy driven by a broad based coalition of interest groups, at the centre of which is the labour movement. Strategic unionism develops a step by step programme of radical reforms - each of which extends the arena of democratic decision- making, and deepens the power of the working class? (Karl von Holdt, SA Labour Bulletin, Vol 16, 1992)

    Without doubt there is nothing wrong in holding these views, but they do not, in their generalised way, help us concretely to radically overhaul the South African social formation. Furthermore, a case can be made in the context of a particular balance of forces for a detour, a retreat, in order to advance. If there is a need for such a retreat, let it be openly said and addressed. To my recollection no-one has openly argued for a retreat currently from socialism and why that would be necessary.

    Towards undoing the impasse - continuing with the unfinished debate sparked by Slovo Slovo?s pamphlet, Has Socialism Failed?, triggered a South African chapter in the broader, global debate on the meaning of the fall of Soviet socialism. One could also see in it a debate on whether the struggle for a post-capitalist society was still relevant - or whether, indeed, we had come as Fukuyama observed to the end of history. Not surprisingly, given the local context into which Slovo was writing (the unbanning of the SACP and ANC; the euphoria of the times, and the rapid commencement of negotiations), this debate has yet to be soberly pursued. This remains a critical challenge for left intellectuals in this country.

    Returning to and rereading Kagarlitsky- In his ?Open Letter to the South African Left?, specifically intended to apply his theory of revolutionary reform to our situation, Kagarlitsky makes these two fundamental points: ?The unwillingness of the African National Congress to encroach upon South Africa?s own large corporations is a clear sign of weakness. This is how it will be perceived by corporate capital; seeing the weakness of the new leadership, the large firms will demand endless new concessions? (Links, no.4, 1995)

    Going beyond, this Kagarlitsky argues for the central role of public ownership, as he puts it: ?Unquestionably, the existence of state property on its own does not yet constitute socialism...But without a strong state sector, resolving all these problems (development) is impossible in principle... The numerous plans for establishing co-operatives and other collective enterprises, and also for flexible social regulation of the economy, seem very attractive. But without a strong state sector all this will simply not work. Unless the state sector acts as the core of the productive system,?self managed enterprises? will be starved of investments and ultimately will be enslaved by finance capital? This radical perspective for a socialised public sector has to be brought into the debate if we are to begin to have levers to transform South African society.

    Intellectuality within the democratic government Intellectuality cannot, however, be restricted to those without access to state power. Disagreement, difference and engagement must be exercised by the left intelligentsia even when in government. This cannot be discounted as de facto impossible as Said implies in the latter section of his Reich Lectures.

    For us to be able to engage radical intellectuals in government, we have got to talk to their concerns - which are, at present, primarily on the policy front. Thus a challenge for us is the necessity of progressive, radical policy elaboration. The need to acknowledge our differences and areas of convergence Within the context of a broad South African left, we need, also, to acknowledge our differences. At the centre of these differences is the pursuit of a radical post-capitalist society. This difference should, however, not mean that we cannot work together. In fact the possibility exists that we will be more able to work together when we know where we agree and disagree. We might then be able to open the debate on what we disagree about.

    Socialisation of knowledge - making intellectuality the function of every one The South African left has always existed and spoken on behalf of a mass popular movement. Part of the continued vibrancy of this movement has to do with relatively high levels of political consciousness. We need in the present situation, nothwithstanding many new challenges, like the need to elaborate policy in more detailed ways, to empower the popular mass movement to engage in an informed way in the unfolding transition.

    "African Renaissance": Reactionary?

    Deputy President Thabo Mbeki has recently re-introduced the theme of an African Renaissance into political discussion in South Africa. Eddy Maloka looks at the history of the concept, and argues that the left should engage actively with it as it has a progressive potential.

    The notion of "African Renaissance" has created some contradictory processes within our movement. On the one hand, this concept has generated a lot of enthusiasm among African intellectuals who see it as a banner to carry in their effort to create an alternative platform to what they regard as white intellectual hegemony within the movement and the country in general. The Egyptologists are even gaining some popularity with their Afrocentric version of the histories of humankind and the world. Some PAC intellectuals have also taken up "African Renaissance", but with the intention of projecting it as their property; to create the impression that comrade Thabo Mbeki is now adopting what the PAC has always been espousing.

    But there is also a counter current to the "African Renaissance" movement. Some comrades who regard themselves as the Left see "African Renaissance" as a "right- wing" ploy within our movement. Not only is "African Renaissance" perceived as a misleading, class-blind concept; the Left is also concerned with "African Renaissance" as a movement of the African petty bourgeoisie interested in advancing its own class agenda. Some members of non-African national groups are also concerned with "African Renaissance" which is perceived as an Africanist movement to marginalise the Coloureds, Indians and whites as minorities within the Alliance.

    What is "African Renaissance"?

    Perhaps, the best starting point is to ask: what is "African Renaissance"? The movement for the renaissance or the reawakening of Africa is not new at all to the continent. This movement was historically part of Pan-Africanism which emerged in reaction to slavery, colonialism and, later, decolonisation. Pan-Africanism was developed by Africans in the diaspora, notably African-Americans and Caribbeans, but later found its footing on the African soil with decolonisation. This movement, however, was largely confined to intellectuals. Its initial concerns were intellectual and cultural; early proponents of this movement wanted to prove to whites, at the height of racism, that Africans were also human and that they had a rich history too. With decolonisation, this movement developed a political dimension. Within a decade after decolonisation, however, the question of economic emancipation started gaining some prominence.

    Within that Pan-Africanist ambience, the renaissance of Africa became a hope. Long before decolonisation, a number of African intellectuals were already theorisng about the renaissance of the continent. They wanted to see Africa industrialising and closing the socio-political and economic gap between itself and the developed part of the world. In his 1937 Renascent Africa, for example, Nnamdi Azikiwe, after distinguishing between "Old", "Renascent" and "New" Africa, outlined what he regarded as the five bases of "the philosophy of the New Africa". These bases were:

    (a) the spiritual balance which had to be cultivated among "Renascent Africans";
    (b) social regeneration which had to be experienced within African societies;
    (c) the economic determinism, that is the quest for food, shelter and clothing;
    (d) mental emancipation which involved, among others, educating "Renascent Africans" about the Afrocentricity of history; and
    (e) nation-building.

    After decolonisation and with the hope of the first few years demolished by the reality of neo-colonialism, the call for the renaissance of the continent started assuming a more radical character in some quarters. An example was Leonard Barnes' African Renaissance (published in 1969) which advocated for a "Positive Policy" to bring about the renaissance of Africa. Key in this policy was the "modernisation" of Africa through programmes which aimed at expanding the internal market, developing services and amenities, as well as addressing the plight of the urban and rural poor.

    It is clear from the above two books that the "African Renaissance" movement of today has a lot in common with its predecessor. Central to this pending renaissance is the question of the economic recovery of the continent to close the technological/industrial gap between itself and the developed part of the world in order to feed, clothe and shelter its people. One must add that this concern was never the monopoly of the renaissance proponents, anyway. People have always approached this concern from different perspectives. Examples include Ben Turok's Africa: What Can be Done?, and Samir Amin's notion of "delinking".

    But there are some significant differences between the two movements for the renaissance of the continent. Firstly, the early movement for the reawakening of Africa was more apocalyptic than anything else. To those comrades, the awakening of Africa was at hand; it was just a matter of putting in place a few things. Today, by contrast, proponents of the renaissance are well aware and conscious of difficulties that lie ahead. They think the renaissance will occur during the 21st century, but their projection is informed not by apocalypse but by a realistic reading of conditions and possibilities.

    Secondly, the early movement was constrained by the fact that it operated within the context of colonialism and, later, the Cold War. The liberation of Namibia and South Africa, by contrast, has put a final end to colonialism on the continent; and not to mention the end of Cold War which has created conditions relatively favourable for the economic and social development of Africa. And finally, the early renaissance movement was confined to intellectuals and the political elite, while today's is part of the general political renaissance of the continent which followed the end of the Cold War and the rise of the African masses to topple one-party dictators and "fathers" of the nation who had been in power since independence.

    Nor are proponents of the new "African Renaissance" adopting the PAC's position. Despite what the PAC thinks, the new "African Renaissance" is fundamentally different from its brand of Africanism. This movement is more inclusive in its definition of "Africa" as a political space, and of "Africans" as a people. In fact, the PAC's own Africanism has changed a lot since the mid-1960s when this organisation started receiving military assistance from China. Since then elements within the PAC have tried to turn Marxist, adding "socialist" to refer to "Azania", a new name they gave to South Africa at the time.

    Because of its broad definition of "African" this "African Renaissance" is far from being an Africanist ploy aimed at marginalising minorities within the Alliance.

    "African Renaissance" follows the Freedom Charter in its definition of "Africans" as all those who live in this country. "African Renaissance" is not informed by a person's skin colour, but calls upon us to love and be loyal to our country and the continent.

    All in all, therefore, the "African Renaissance" of today is a people-driven movement. It is first of all a reaction to the final decolonisation of Africa which has put an end to different forms of colonial rule on the continent. South Africa, because of its relatively strong economic base as well as the moral authority it presently commands, is well placed to lead the continent towards its renaissance.

    The end of the Cold War has, of course, strengthened the hand of imperialism, but it has also created a new political and social climate for the development of the continent. Imperialism no longer has interest in openly supporting repressive regimes and violent conflicts. On the economic front, neo-colonialism in Africa has reached such a crisis that there is now a growing consensus throughout the world that something has to be done to rescue our continent. The UN will soon be holding a special session to discuss the plight of Africa.

    Principles of the Renaissance

    Patriotism is one of the principles of "African Renaissance". While patriotism may be a reactionary force in places such as Europe where it sometimes takes the form of neo-fascism, to call for nation-building and loyalty to a country like ours is indeed a revolutionary thing to do. Our country was torn apart by racial hatred for centuries, and the armed conflict of the last three decades polarised us even further along racial lines. Our movement has an obligation not only to eradicate racial hatred, but also to create a new South Africanness which is not founded on some chauvinistic, exclusivist form of nationalism.

    This new South Africanness is not inconsistent with a class understanding of the nature of South African society. Eradicating the legacy of colonialism of a special type and tackling the national question in a post-conflict society, requires more than just theories. Every post-conflict society needs to create a sense of "nation" - that is a sense of belonging together - as a way of pulling its people together. But "nations", fictitious as they may be, are founded on ideologies and principles which reflect the balance of class forces in a country. In capitalist countries these ideologies tend to reflect the hegemonic position of capital. Then the question is: what about "African Renaissance"? Is this a working class ideology?

    This question brings in the notion of "national consensus". "National consensus" is confusing. To some, this refers to the old social democratic pact which is aimed at immobilising labour and forcing it into submission to capital. Far from this, "national consensus" is used here as an ideological tool for mobilising our population to deal with the challenges of eradicating political conflict in our country. We are also ridding our country of authoritarianism with its "third force" elements. This implies that we must try to create a consensus nationally around principles which will make it difficult for violence to be an acceptable means of resolving differences. This will also make it difficult for the "third force" to operate.

    "National consensus", therefore, is an ideological mechanism to deal with a transition to a post-conflict and democratic society. This is in the interest of the working class which has learnt from countries such as Nicaragua and Angola, that war, no matter how just it may be, can devastate a country to the extent of even reversing whatever gains may have been made.

    Anti-imperialism is another principle implied in the notion of the new "African Renaissance". Indeed, "African Renaissance" is not founded on a class analysis of Africa, but it nonetheless acknowledges the existence of imperialism as a force.

    However, the making of efforts to put Africa, marginalised as it is, at the centre of the world, is potentially anti-imperialist. It is not in the long-term interest of imperialism to see a strong Africa which could affect the balance of forces in the world. Already imperialism is faced with the problem of the Middle East as a political force, and East Asia is an emerging economic power block.

    Part of the renaissance of Africa, one should add, includes the demand to have the continent represented on the UN Security Council. Our country has been playing a leading role in calling for the restructuring of the UN to give developing countries a voice in the making of key decisions. There are also calls for the restructuring of the World Bank and the IMF to give a space to developing countries.

    For that matter, if Africans can own their problems and lead in their resolution as "African Renaissance" promises us, this will challenge the USA which sees itself as the NYPD of the world. Linked to this is the call made by South Africa for the redefining of the role of the OAU to grant it more powers to interfere in the internal affairs of member countries in the event of civil wars or a dictator toppling a democratically elected government. If these processes can be fully implemented, Africa will be able to rid itself of one of major problems which have plagued the continent over the last three decades. In fact, at the recent annual summit of SADC (held in Malawi) President Mandela openly criticised member states which still repressed their people.

    "African Renaissance" is, therefore, also internationalist in orientation. The new "African Renaissance" sees itself as part of the South, and places a lot of emphasis on South-South (including regional) relations which go beyond the confines of the continent. Indeed, South-South relations may simply refer to contact between leaders and capitalists of the South at the expense of peasants and workers. It is for this reason that the content and agenda of "African Renaissance" and South-South relations in general, remain a contested terrain. It is upon those who see themselves as advancing the interests of the peasants and workers to be part of these anti- imperialist, internationalist processes (and not boycott them because they are not mentioned in the red book!).

    What are the Problems?

    There are, of course, a number of ideological problems with the "African Renaissance" movement. First of all, granting the OAU powers to intervene in the internal affairs of member states is not without problems. Concepts such as "human rights", "democracy" and "peace" are not ideologically neutral. "Human rights"

    tend to be reduced to political rights at the expense of equally important rights - namely, social and economic rights. The overemphasis on political rights is, of course, convenient for those who want to play down the unequal distribution of the wealth of the world. In the West "democracy", as we all know by now, is used interchangeably with multi-partyism, while this concept should properly also refer to such crucial factors like popular participation in politics as well as the transparency of political institutions and the accountability of politicians. "Peace", for its part, may well simply refer to the effectiveness of the hegemony of the dominant class. It is for such reasons that we should think carefully about introducing something which could be used tomorrow against revolutionary movements in Africa.

    Furthermore, the tendency of some "African Renaissance" proponents to put emphasis on the middle class - especially the hope of using foreign capital to promote and develop this class - may be counter-productive. It is certainly progressive to promote the development of a black bourgeoisie within the context of a capitalist system where capital is in the hands of a white minority. This black bourgeoisie will, however, not necessarily play a progressive role.

    Indeed, black business tends to use very ruthless and paternalistic labour policies (calling for "ubuntu") which are inconsistent with the vision of the ANC-led government. But what makes this bourgeoisie an important force within our context is the fact that it relies on the support and protection of the ANC-led government to survive. In this way, the ANC-led government will be able to diversify the ownership of our economy, and strengthen its position vis-?-vis capital in general. The more diversified the ownership of the economy, the stronger is the state; and the more monopolised is the economy, the weaker is the state.

    In the situation where we are involved in the process of transforming the state and taking over its different branches (i.e., civil service, intelligence, army and police, judiciary and government), we also need to bear in mind that power ultimately lies in the economy. For our government to strengthen its position in the economy - and therefore its strength vis-?-vis the formulation of economic policies - it must address white monopoly by encouraging diversity in ownership. Foreign capital (especially that from the South) and the "patriotic" bourgeoisie can be manipulated to achieve this objective. But this does not mean, as said earlier, that these forces are necessarily progressive. This is a tactical move to give government more autonomy and control over the economy and the formulation of economic policies.

    But the black middle class and its advanced bourgeois section, have seized upon "African Renaissance" as an ideological tool to generalise its interests to make them that of the "people". This class is also prepared to use this ideological tool in its fight with other capitals, be they foreign or white. It is in this context that "African Renaissance", vague and open-ended as it is, is a contested ideology. We want to argue here that what makes "African Renaissance" a powerful tool for managing our transition to a post-conflict society and positioning our continent internationally is what we regard as its key principles, namely: people-centred political renaissance, economic recovery, patriotism (and national consensus), anti-imperialism, and internationalism.

    The motive forces for bringing about the renaissance of Africa should not only be the elites; ordinary masses should play a leading role. If left on its own, the "Renaissance" will just become of movement of the elite (and intellectuals in particular), and will ultimately suffer the fate of its predecessor.

    Some reflections on industrial policy in South Africa

    The SACP has been arguing that we need to focus much more substantially on a coherent industrial policy. However, industrial policy is itself a terrain of contest. In this paper by the SACP Political Education Secretariat it is argued that, while industrial policy is often couched in the technical language of economics, it is fundamentally about the structure of production and the role of the state, it is essentially ideological. Its terms must therefore not be dictated by those who seek to remove it from the politically contested terrain of the position, activities and development objectives of the South African government.

    This paper will first discuss the definitional and conceptual questions around industrial policy, before examining its role and position in the present policy debates. It will then discuss the role of the state and the market and will argue that much of the policy debate makes the mistake of assuming that the state is homogenous and is separate from the market. This formulation ignores the economic and political forces which operate through both the institutions of the state and various markets and private sector institutions. It therefore precludes an analysis of the impact of COSATU as one of the competing groupings within the governing alliance.

    The paper then briefly analyses South Africa's industrial structure before outlining the major contributions on industrial policy in South Africa. These contributions include those of the World Bank (Fallon and Pereira da Silva, 1994), Fine and Rustomjee (1996), Industrial Strategy Project (1995), members of each of whom have also been directly involved in policy formation and implementation. The paper concludes by evaluating industrial policy measures under the new government and suggests elements of an alternative approach.

    Some definitional and conceptual issues

    What is industrial policy?

    The definition which is adopted of industrial policy influences the particular policy measures which may be considered by government in pursuit of any identified objective. There are two broad approaches to defining industrial policy.

    The first approach is relatively narrow, in that it identifies industrial policy as being explicitly directed at industry, with particular objectives related to industrial development and industrial structure. This is the most widely used approach, and at first glance appears to be a common sense one and in effect limits industrial policy to the realm of the Department of Trade and Industry, which simplifies discussion of responsibility and institutional structure. But, it limits the consideration of the impacts of different policies across economic sectors and restricts the co-ordination of economic policies across different branches of government.

    This approach itself encompasses a range of definitions, distinguished by whether industrial policy necessarily involves the targeting of sectors or firms. For example, the World Bank defines industrial strategy as 'government efforts to alter industrial structure to promote productivity based growth' (World Bank, 1993). In comparison, Chang (1997) defines the core of industrial policy as consisting of targeted policies (mainly at the sectoral level).

    The second approach (adopted by Fine and Rustomjee, 1996) is not to delimit industrial policy in abstract from the country and issues being evaluated, on the grounds that any definition is not ideologically neutral, and hence prior choice will prejudice the outcome of any assessment. Instead, industrial policy may include any policies which impact on industry (as compared with policies directed at industry).

    While the second approach may seem to duck the issue, it can be readily seen that the first definition rules out macroeconomic policy (including interest rates), although the direction and subsidisation of credit could be considered an industrial policy were policies of this nature to be followed by the government. In particular, the industrial restructuring presently underway in South Africa is heavily influenced by the extremely high real interest rates that are a product of Reserve Bank monetary policy. This policy also impacts on the exchange rate (recent movements of which dwarf changes in tariffs for most, if not all, industries). In a similar vein, government provision of infrastructure and utilities (especially power) is also relevant to the discussion. For example, cheap electricity and the provision of road and rail links directly affect industries' costs and profitability, and may easily be 'targeted'.

    Therefore, while 'ring fencing' policy areas may make understanding superficially easier, and the division of responsibilities between government departments clearer, it also circumscribes the role of the state in economic development. This is because the separation of policy areas does not allow for planning to overcome co-ordination failures between the spheres of different ministries, and economic policy is just the sum of policies followed by different ministries, some of which may contradict each other. The impact of monetary policy on interest rates, which deters investment, and investment incentives designed by the DTI to encourage investment, is one example of this.

    The present focus on the limited definition means that policies which impact on industry (but are not necessarily directed at industry) are not considered in terms of which interests they benefit. Thus, under the narrow definition it may appear as if there is a bias in favour of small scale industry, as the DTI has several industrial policy measures which specifically support SMMEs and none which are targeted at large scale firms. However, the monetary policies of the Reserve Bank clearly favour large scale business, but are not considered in the industrial policy mix.

    State or market? - a false dichotomy

    Conceptualising the role of the state as replacing or supplanting the market (hence either the market or the state) severely limits the options for government intervention. It implies that the government must directly control resource allocation or it should be left completely to market forces. From this perspective government intervention is either regarded as direct administration of resource flows, as in the old style planning of the USSR or India, or decisions regarding how to spend the government budget. It is arguable that making the false dichotomy between the state and the market resulted in the RDP being limited to a social expenditure programme. Far from changing the incentives facing agents in the economy, it has become solely to do with the RDP fund, and reprioritisation of departmental budgets.

    Clearly however, the government does not have to spend money and/or direct resources to influence economic activity and the working of markets. In fact, the functioning of markets requires government actions, meaning that government policy choices, whether implicit or explicit, impact on allocation through market mechanisms. Far from being separate, the state and market are instead highly integrated.

    In addition, the state or market dichotomy also implicitly excludes labour, as 'free markets' are synonymous with the interests of business. Instead a better understanding is gained by viewing both the state and market as highly heterogeneous, composed of a range of institutions, through which different classes and their subgroups pursue their interests.

    The theoretical case for government intervention

    The perception is that the South African government is reluctant to actively intervene in the economy. At the same time, a large body of economic literature would support an alternative stance. This includes a growing consensus on the impact that an active industrial policy had on the growth of the East Asian economies. It also ignores the efficacy of industrial policies under the old apartheid regime (discussed below).

    It is now widely accepted that the static model of market allocation, based on perfect competition, has severely limited applicability in economic analysis and is especially weak in analysing economies undergoing structural change. A whole body of new theories of trade and growth complements and adds to older theories of economic development and change. The existence of externalities (spill-over effects of the decision of one agent on others), imperfect information and imperfect competition mean that market prices do not reflect the benefits and costs to society of different options, nor can people and firms necessarily respond to different signals. Market mechanisms do not therefore allocate resources efficiently.

    While many of these failures are more significant in developing countries, perhaps more important is the failure of markets in what has been termed their 'creative' role of mobilising resources to realise potential economic outcomes. Given imperfect information, market prices reflect present allocations, not future possibilities, and therefore provide incorrect signals for far reaching structural change. The obvious implications for South Africa are that market prices reflect the industrial structure and allocation of resources bequeathed by apartheid, not the future shape of an economy after radical structural change. These problems associated with market signals are particularly important in financial markets, training and skills development, and the adoption or development of new technologies.

    Neo-classical economics has explored the impact of market failures within what is termed 'welfare analysis'. The theories that underpin this type of analysis are essentially static in nature and ignore the far-reaching linkages between different areas of the economy. Arising from this weakness in the theories, the central debate has been over the appropriate response to the 'failures'. Neo-classical economists believe government action should be limited to 'correcting' these failures and so enabling markets to work. However, terming them 'failures' is misleading and lends itself to limited corrections, while in truth the failures are market realities and pervasive. This implies a widespread and integral role for government in tackling the more general co-ordination failures of market mechanisms and in promoting structural change.

    The East Asian experience

    The debate over structural change and the efficiency of the market has been the major focus in the interpretation of the economic successes of the East Asian economies which combined high growth rates and the development of new industries with a relatively equal distribution of income. The World Bank and fellow travellers interpret the success as due to exposure of domestic firms to world markets which, in addition to traditional arguments for free trade, also allows attainment of economies of scale and adoption of foreign technologies.

    In response to overwhelming pressure (and funding from Japan) the World Bank retreated from this position in the 1993 study The East Asian Miracle. However, the Bank manages to maintain its broad policy position in favour of wide ranging liberalisation by claiming that industrial policy did not in fact impact on industrial structure. It claims that the structure of the East Asian economies is that which would have been predicted under neo-classical theory on the basis of factor accumulation and relative factor prices. Yet, the inability of neo-classical theory to explain the creative and dynamic elements in factor accumulation has long been criticised. The World Bank study further asserts that selective interventions had little impact (negative or positive) but rather 'functional interventions' correcting market failures were important. The most important reason for success is the correct 'fundamentals' of macroeconomic stability, primary and secondary education, openness to foreign technology and limited price distortions, under the broad heading 'market friendly'.

    The flaws of this study have been widely exposed, and indeed progressive economists have been largely preoccupied with critiquing the World Bank's analysis rather than with developing alternative models and frameworks. There is no East Asian 'model', but evidence for the potential for wide-ranging government intervention based on the specific conditions in the economy and government objectives.

    It is now clear that the success of the East Asian economies directly resulted from selective and extensive state intervention. Moreover, their policies were tailored specifically to the conditions in the economy and sector in question. Far from helping markets to get prices right, government followed policies of deliberately 'getting prices wrong' - strategically wrong (Amsden, 1989). In this way, government directed the allocation of resources, especially investment, through markets, and supported this stance through co-ordination of different policies towards the same end. This included, for example, the direction and subsidisation of credit, which was successful because it was linked with trade protection, training and skill development, access to foreign exchange, etc.

    In addition, macroeconomic policies were included in the policy tools used to promote long-run industrial development. Active demand management, utilising fiscal policy, incurred high government deficits at times, which were sustainable as the economies were kept on high growth paths. The impact of the deficits were also lessened as interest rates were mostly only slightly positive in real terms, credit extension did not rely on private sector institutions, so the impact of 'crowding out' was minimal, and private savings were mobilised in other ways, through direct measures if necessary.

    The developmental state

    The East Asian analyses have also given rise to literature on the 'developmental state'. Having established the potential role for government, the challenge is to identify the conditions necessary for the state to fulfil its potential role. Within the East Asian economies, the state has commonly been identified as relatively autonomous from different interests such that it could support 'development' goals. As has been discussed by Fine and Stoneman, this begs the question. If they are autonomous, why was it in their interests to pursue these objectives? After all there are many counter- examples of autonomous, strong and dictatorial states which have pursued the narrow interests of their members and built a wealthy elite instead of promoting egalitarian growth. The alternative explanations take recourse either in the particular historical circumstances (which risk being deterministic) or in some notion of public spiritedness.

    The 'developmental state', in this literature, therefore lacks content and, in emphasising the need for the state to be autonomous, ignores the formation and direction of state institutions by conflicting political and economic forces.

    In the case of South Africa, the adoption of this flawed conception of an autonomous state supports the marginalisation of labour and MDM structures from government, while remaining part of the alliance. Instead, perhaps above all, the contemporary South African experience is of government policy being formed as the result of contestation both within and between different institutions. The implication of this is that industrial policy is of central concern to COSATU, and should be a major focus in considering the future of the unions. We turn now to industrial policy and industrial structure in South Africa in more detail.

    South African industrial structure

    Analysis of the existing industrial structure is the logical starting point for assessing industrial policy and industrial restructuring. Moreover, this structure has been heavily influenced by fractions of capital working in conjunction with elements of the apartheid state. While the balance of power within the state has fundamentally shifted with the election of a democratic government, business has still shown itself able to influence policy. There is evidence of this both in the weight given to business confidence, and in the Reserve Bank policy of following rather than leading financial markets, each of which incidentally seem to ignore recent theoretical developments and the major empirical lessons drawn from the East Asian experiences.

    Industrial structure is typically discussed in terms of two dimensions. The first is the relative strength of sectors in the economy, especially the size and characteristics of the manufacturing sector in comparison with the minerals and agriculture sectors, while the second dimension addresses the structure of ownership. The typical analysis of South Africa's industrial structure in these terms centres around the twin assertions of the declining share of mining and the inefficiency of the manufacturing sector. Within this analytical framework, the next step is to identify the concentration of ownership as one of the main reasons for the poor performance of manufacturing.

    This description of South Africa's industrial structure leads to attributing the inefficiency and underdevelopment of manufacturing to the high level of protection from imports, as well as the impact of apartheid policies on the labour and capital markets. Analyses in this vein sometimes include the impact of inequality on consumption, but do not follow this through to the need for redistribution in order to change the patterns of domestic demand.

    Instead the emphasis in policy prescriptions has been on 'openness' to world markets to achieve 'export-led' growth and a reduction rather than a reorientation of government intervention, albeit accompanied by a range of 'supply-side' policies to improve productivity and competitiveness.

    These policy recommendations rely on a flawed understanding of the existing industrial structure and a superficial analysis of the potential strengths of the South African economy. By separating the sectors in this way, the analysis of industrial structure is hidebound by sectoral definitions rather than based on the linkages which actually exist between production units. For example, smelting and other related processes are classified under manufacturing although they are very closely related to minerals and generally take place under the same conglomerate as the mining of the raw material itself.

    A more careful analysis reveals that the performance of manufacturing differs widely across sectors, with those linked to mining and energy (deriving mainly from coal) relatively strong, and other areas relatively weak. It is possible to identify a 'Minerals-Energy Complex' (Fine and Rustomjee, 1996) composed of those manufacturing sectors closely related to mining, and the electricity generation industry. Using this approach it is found that, while the share of mining in total production has been declining, its significance when the industries which are closely linked to it are taken into account, has not. For example, it is often stated that the share of manufacturing in GDP has been increasing, to a peak of 26% of GDP in 1989, however if the sectors of manufacturing closely related to mining and energy are omitted, the manufacturing share of GDP has not risen above its 1980 level of 18%.

    A framework based on linkages further highlights the important role of the state in the development of industry. The leading sectors include industrial chemicals, basic iron and steel and non-ferrous metals, in all of which the state was directly or indirectly involved in very specific ways. These sectors have also been among the five best performing sectors by export value, from 1991 to 1995. This suggests that intervention has been instrumental in the development of an industrial core, with the capacity to export.

    Rethinking industrial structure has important implications: the new industrial policy should grapple with the economic core of the MEC, and will be formed out of contesting influences, which will in turn affect the patterns of employment, income distribution etc. Labour and progressive forces must engage wholeheartedly, both through the alliance and independently, to impact on the policy stance. Failure to do so, and an implicit acceptance of a misconceived notion of industrial structure would support the rationale for liberalisation (and the need to be 'competitive'). The industrial policy implications of different interpretations of South African industrial structure are examined below.

    An understanding of the industrial structure in terms of linkages between different sectors, and the interests involved also enables us to understand how previous state intervention and present liberalisation may be consistent with the pursuit of the same interests. For example, large-scale mining capital worked extensively with and through the state to develop a cheap (subsidised) transport infrastructure serving the production needs of the conglomerates. The state also through direct ownership and control of Eskom intervened strongly in power generation to supply cheap electricity which constituted a major cost of mining and large scale industry. When there were prospects of a government which may have other priorities in these areas, interests were judged to be best served under private ownership, hence the privatisation policies of the early 1990s, stalled by mass action but now ironically revived under the ANC dominated GNU.

    Industrial restructuring in South Africa and industrial policy

    This section will outline the main perspectives on South African industrialisation and industrial policy, showing their theoretical roots, a well as their implicit or explicit evaluation of South Africa's industrial structure. These different perspectives have influenced policy formation, and an understanding of them is necessary before analysing the industrial policies of the democratic government, and the implications for labour.

    The World Bank analysis and policy recommendations, as contained in the document South Africa: Economic Performance and Policies (Fallon and Pereira da Silva, 1994), are based on the typical division of economic sectors into manufacturing, mining, etc. It therefore finds that manufacturing, while having grown, has been stunted by import substituting industrialisation policies, labour market rigidities and subsidised capital which encouraged capital intensity and supported inefficiency. In combination, these resulted in low productivity which, in turn, resulted in a deterioration of investment and the uncompetitiveness of South African manufacturing. The Bank's policy recommendations to redress this situation were trade liberalisation, and a reduction of distortions (mainly due to the state) in factor markets (labour and capital). The logic of these recommendations regards a stable macroeconomic environment, and the 'right' prices as providing an enabling environment to stimulate exports, with a corresponding stimulus to the upgrading of skills and technology. There is, therefore, no real role for industrial policy in this analysis.
    A similar emphasis on 'market friendly' policies is proposed by the South African Foundation 'Growth for All' document. However, it relies on a more aggressive liberalisation, while the role of the state is even more weakened. In supporting this position it refers to the empirical evidence on the performance of the East Asian countries, seemingly ignoring the major role of government in strategic interventions in these countries. It is, therefore, a good illustration of theory and international experience being mobilised by business to support a policy stance which is judged to be in their interests at a particular juncture.

    While the Industrial Strategy Project (ISP) analysis has very different roots from that of the World Bank, it starts from a similar interpretation of South Africa's economic performance. The South African growth model is identified in the ISP report as an extreme version of the Latin American model, namely import substitution in conjunction with a highly unequal distribution of income further limiting the size of the domestic market. This (combined with the overly capital intensive nature of much of manufacturing) accounts for the uncompetitiveness of industry, as illustrated by poor productivity and export performance. On the basis of this model, it is asserted that although protection enabled the manufacturing sector to achieve some measure of success in standardised consumer goods, the sector was unable to progress to higher value added, differentiated products and intermediate and capital goods.
    The challenge now is to achieve a productivity-based expansion of manufacturing with exports providing the main market. As such, trade liberalisation is of central importance in the removal of the anti-export bias in order to benefit from the adaptation of leading edge technologies as well as the adoption of international forms of work organisation that improve productivity.

    Industrial policy does however have various roles to play, and the ISP defines a successful industrial strategy as one seeking 'to co-ordinate policy such that the state works together with and, indeed, seeks to improve the effective functioning of markets.' (p.15). From the diagnosis of South African industry, this requires measures to change the work organisation, skills and technology in manufacturing enterprises (so called 'supply-side' measures). Underlying the ISP's approach to industrial policy is therefore the elevation of productivity as the central determinant of industrial development. On this basis, a range of policies are recommended to improve productivity, although these are in general quite vague, such as 'measures to promote organisational change in industry; measures to support more multi-skilled training and the transferability of qualifications..'

    Under the ISP approach, government intervention is necessary, but limited to where there are clearly identified market failures producing sub-optimal outcomes. The use of competition policy to tackle the concentration of ownership is also seen as important by the ISP, as competition is the underlying stimulus to economic development.

    This 'market friendly' approach is distinguished from that of the World Bank in a number of important respects. The ISP does support targeting of 'capabilities', by which is meant measures to enable manufacturers to specialise in higher value added products in their chosen sectors. The targeting therefore cuts across sectors and involves selection of higher levels of technology or different methods of organisation of production, rather than selection of firms or sectors. It is unclear what this means in practice beyond the development of a technology policy and the supply-side policies identified above, and it does ignore the wider implications of market failures, especially in a dynamic context with imperfect capital markets. While the ISP does, however, acknowledge that the success of industrial policy requires the co- ordination of tariff reform, export support, supply-side policies and exchange rate policy , the analysis fails to explore the wider role of the state that this implies.

    The ISP approach has been widely criticised from very different viewpoints (for example, Bell, 1995), however the most important weakness is its underlying assumptions about South Africa's existing industrial structure, and the interpretation of import substituting industrialisation centred on productivity. As has been argued above, this ignores the development of industrial and export capabilities in sectors closely related to the minerals and energy 'core'. While ISP does emphasise the need to develop vertical linkages in order to improve manufacturing performance, this is largely limited to the improved organisation of production as part of a move toward 'flexible specialisation' strategies.

    The ISP recommendations are also in direct contradiction with the experience of East Asian economies. In countries such as South Korea, factor accumulation, not productivity, provided the major stimulus to growth, while the recognition that market failures in financial markets had a major impact on potential growth was also of central importance. In addition, exports in the Newly Industrialising Countries served a very different purpose from that understood by the ISP. The requirement to export acted as a discipline mechanism on firms by which the government could assess progress (Lall, 1994) rather than as a means of raising productivity. While linkages between industries were also a very important part of the industrial strategy, they were not primarily seen as a means of increased flexibility, but instead were part of a co-ordinated development of industrial capacity. In addition, domestic demand management was an important tool in the industrial policy mix.

    Interventionist policies in the domestic market were used as a launch pad for the attainment of economies of scale, as an integral part of the success of the East Asian economies in achieving growth and relative equality.

    Fine and Rustomjee argue that South African industrial policy should build on the existing strengths of industry, and recognise the successes in developing industrial capacity around the minerals and energy core. The failure of the Minerals-Energy Complex has been the lack of development from this core due to capital flight after 1985 and the risk averse nature of large scale capital, in addition to the wider effects of apartheid. Much of the private sector investment and expansion of the conglomerates during this period was due to acquisition of both disinvesting foreign companies in response to sanctions, and of formerly state-owned enterprises such as ISCOR. At the same time, perhaps paradoxically, the sectors in which South Africa has world class technological and export capabilities are those in which state intervention has been greatest , such as arms and chemicals.

    In addition, Fine and Rustomjee argue that there was no coherent import substitution policy. Tariffs were not effectively structured but depended on applications to which the Board of Trade and Industry responded and were set on the basis of nominal rather than effective measures of protection, which were badly designed and implemented. While reform of tariffs is therefore undoubtedly required, there is no strong case for liberalisation based on the failure of the past protectionist policies. Rather, co-ordination to promote further diversification from the core is required, and mass production for the domestic market is an important source of demand as part of a strategy to stimulate increased investment and a deepening of industrialisation. The development and expansion of industrial capacity is the foundation which will ultimately enable exports in a reverse of the causality assumed by the ISP.

    Industrial policies under the new government

    While there have been major policy shifts in line with the mandate of the ANC, changes have generally been slower than was expected, and there are many elements of continuity with the previous regime's policies. A striking example has been the IDC's continuation of support for large 'mega' projects in partnership with the private sector, and the mobilisation of support for them through other policies, such as tariffs. This again emphasises the importance of situating an understanding of industrial policy within the debate on the role of the state and the influence of different interests.

    The single most important policy directly impacting on industry and industrial structure has been the trade liberalisation programme. A number of important reforms have already occurred under this broad move towards increased openness, including removal of the import surcharge, removing quantitative restrictions and phasing out of the General Export Incentive. The rationalisation and reduction of tariff levels agreed on under the GATT/WTO was initiated in 1995, and involves radical changes in the structure and overall levels of protection.

    These changes have major impacts on different industries, and change the returns to producing various types of goods. The overall outcomes depend on the ability and willingness of firms to respond, which in turn depend on the ability to retrain labour, to make new investments, the market structure, access to finance, etc. In broad terms, restructuring could occur in the context of down-sizing, with increased imports forcing South African firms to contract and cut costs. The case for liberalisation however is that this will be outweighed by expansion of firms producing for export, who are now able to import machinery and intermediate goods at world prices, and have access to better technology. In short, South African production should focus on the areas in which there is an existing comparative advantage such that firms will produce more of what South Africa does best. The evidence on South Africa's industry when assessed within this framework finds that low skill, low wage sectors are not competitive, suggesting that jobs will be lost in these areas. This explains the ISP emphasis on training, work organisation and productivity in order to move up the value chain. While policies to increase training etc. are desirable anyway, this approach effectively condemns a generation of workers who have been failed by the education system, and are unlikely to participate in the new growth areas, to long-term unemployment.
    The initial evidence is not encouraging for the liberalisation and supply-side schools. There are signs that growth slowed rapidly in 1996, and yet employment generation has been negligible in light of both the job loss during the last recession and the growth in the labour force. In particular, after accelerating rapidly from mid-1994 to mid-1995, manufacturing growth has dropped sharply, and firms are shedding labour once more (Figure 1). The aggregate data hide structural changes, which have led to what has been termed 'jobless growth'. The deteriorating performance of the manufacturing sector is of major concern as, although agricultural performance in 1996 was strong, and the service sector continued to grow, in the medium to long-term manufacturing must be the engine of South African economic growth.

    Figure 1: Annual growth of manufacturing production and employment

    Source: South African Reserve Bank, CSS Notes: 1 Growth rates calculated as percentage change over same quarter in the previous year.

    2 Employment data for TBVC are included from Q1 1996, and have been estimated by SARB for 1993 to 1995, such that there is a break in series, second quarter of 1994.

    3 Seasonally adjusted data.

    The Director-General of the Department of Trade and Industry has noted that industry is presently going down the 'dead-end' of downsizing in order to achieve competitiveness , while instead he argues that co-operation and information sharing by business is required for it to capitalise on the opportunities presented by trade. From these comments it appears as if policy is being formed on an idealistic expectation of what industry should do, rather than an analysis of private sector behaviour. This analysis would recognise that (as is widely acknowledged) concentration and market imperfections mean that non-cooperative sub-optimal outcomes emerge in the absence of state intervention. In this context liberalisation in many developing countries has led to job loss in previously protected industries, but little employment creation in response to the improved incentives to export from increased openness. Even if restructuring were successfully to expand production, it may not necessarily result in net employment creation. There is evidence that South African manufacturing exports are less labour intensive than import competing products, suggesting that employment loss will result from a shift from the domestic to export markets (Bell, 1995).

    Furthermore, as discussed above, particularly in an economy undergoing structural change such as South Africa, market prices do not reflect the potential outcomes of processes of dynamic transformation. Future returns to production are in large part determined by investment and skill development which take place now. This implies under-investment by the private sector, and restructuring through down-sizing rather than expansion is to be expected in the absence of far reaching government intervention. While the private sector does have an important role to play, the structure of incentives faced by business must itself be viewed as an important policy instrument that government can use in transforming the South African economy.

    There have been other government measures to promote industrial development. A series of measures in the supply-side mould have been embarked upon. These were initially set out in the document submitted to Nedlac in November 1995 'Support Measures for the Enhancement of the International Competitiveness of South Africa's Industrial Sector'. These measures include many that are consistent, if not arise out of, the ISP report, such as on human resource development, development finance, technology enhancement, etc. Implementation has proved slow, while the liberalisation schedule proceeds. The IDC has in place a programme of subsidised credit for companies significantly affected by tariff reductions (the 'world player' scheme) to support their restructuring into internationally competitive exporters. In addition, there are incentives to attract foreign investment in the form of tax holidays and accelerated depreciation allowances. The National Qualifications Framework is also being developed, but efforts to change productivity, improve technology and promote greater flexibility through new methods of work organisation do not seem to have progressed.

    The impact of these policy shifts must be understood as arising out of the framework being used, and the interpretation of South Africa's industrial structure outlined above. Provision of finance and measures for training are probably beneficial in any event. But, the focus on promoting capabilities ignores the differences between different sectors in terms of the determinants of industrial development. Firms do not costlessly adjust to market signals, and their ability to expand depends on linkages with other firms and sectors. Following the markets with measures on a non-selective basis which reinforce market allocation risks redundancy and the waste of resources and does not address the fundamental issues. For example, just as large and already successful exporters received the great majority of GEIS payments as an added bonus, firms which may have invested in any event will now have their profits boosted by tax holidays. If the tax holiday did in fact make the difference between investing or not, then at the end of the holiday period the firm may well look to relocate to other countries offering new opportunities.

    Meanwhile, possible direct measures such as intervening in private sector lending to alter the allocation of finance by the private financial system are ignored, as is the potential for government investment in infrastructure to support and stimulate private sector investment, based on an analysis of potential production opportunities. This approach also largely dispenses with a systematic use of protection as part of a dynamic industrial development strategy, although as noted above, the IDC and large-scale industry have still been successful in winning tariff concessions. This is possible as the schedule for reductions has been framed in such a way as to leave a margin between the GATT/WTO binding level and the revised tariff level, allowing government discretion in relaxing liberalisation targets to some extent. There has been little evidence to date of this room for manoeuvre being systematically utilised.

    The essentially short run, contractionary approach being adopted is heavily reinforced by macroeconomic policy. Stabilisation of nominal macroeconomic variables (with the lowering of inflation at the centre) has been prioritised by the Reserve Bank utilising interest rates as the only tool. This has led to extremely high real interest rates, with consequent effects on the costs of new investment. Fiscal policy has had reduction of the deficit at its centre regardless of the stimulus of government spending, whether on education or infrastructure, for future growth.

    Elements of an alternative

    The above analysis has attempted to identify the links between theory, policy and outcomes, and has placed industrial policy within the broad debates on the role of government. There are a number of important implications which point to an alternative formulation of industrial policy:

    The state is composed of highly heterogeneous institutions and policies arise as a result of conflicting interests acting through different institutions. Viewed in this way, it is crucial for the progressive trade union movement to continue to actively promote a clearly articulated agenda, rather than being influenced by claims that the state needs to be autonomous in order to pursue development goals on behalf of the population as a whole.

    A critical role of government, both on theoretical grounds and from an analysis of the success of East Asian industrialisation, is the co-ordination of economic activities across the economy. This is consistent with the original view of the RDP, which must be revitalised, presumably in the office of the Deputy President.

    Direct intervention is required, particularly in financial markets, to influence the flow of funds for investment. The use of voluntary agreements (such as that for low-cost housing) with financial institutions has manifestly failed.

    Transformation of the IDC must be a priority and moves by those within the IDC to increase its autonomy must be resisted. Instead, its role in industrial policy formation must be brought more closely under the DTI, and its criteria for lending must be more strongly targeted, to be consistent with industrial policy goals.

    Tariff liberalisation should be revisited. Overall tariff levels may be reduced in line with WTO imperatives, and this will benefit consumers, including those of low income 'basic needs' goods. However the room for manoeuvre in the present tariff agreement must be utilised as part of a coherent industrial strategy based on a conception of a future industrial structure.

    Macroeconomic policy should be set in conjunction with development goals. Fiscal policy must therefore take into account the role for increased public investment in infrastructure, while tax levels should be consistent with promoting resource allocation as part of the orientation of a broad industrial policy. Monetary policy must be evaluated against the impact of interest rates on investment. Furthermore, demand side policies must be actively used as an important tool of the government strategy.

    Large-scale business must be strategically engaged through a variety of means. The impact of protection and public investment on business must be utilised in this respect. Another key area is the reform of competition policy, which should focus on behaviour rather than narrowly on structure. Behaviour should be identified broadly in terms of industrial development goals, rather than in narrow anti-competitive terms.

    References

    Amsden, A. (1989) Asia's Next Giant: South Korea and Late Industrialisation, New York and Oxford: Oxford University Press

    Bell, T. (1995) 'Improving Manufacturing Performance in South Africa: A contrary view', Transformation 28

    Chang, H-J (1997) 'Evaluating the Current Industrial Policy of South Africa', forthcoming as a working paper of the Trade and Industrial Policy Secretariat, Johannesburg, South Africa.

    Fallon, P. and L. Pereira da Silva (1994) 'South Africa: Economic Performance and Policies', Informal Discussion Papers on Aspects of the South African Economy No. 7, Southern Africa Department. World Bank.

    Fine, B. and Z. Rustomjee (1996) South Africa's Political Economy: From Minerals-Energy Complex to Industrialisation?, Johannesburg: Wits

    University Press
    Fine, B. and C. Stoneman (1996) 'Introduction: State and Development', Journal of Southern African Studies 22 (1)

    Joffe, A., D. Kaplan, R. Kaplinsky and D. Lewis (1995) Improving Manufacturing Performance in South Africa: Report of the Industrial Strategy Project , Cape Town: UCT Press

    Lall, S. (1994) 'The East Asian Miracle Study: Does the Bell Toll for Industrial Strategy?', World Development 22 (4)

    Portfolio Committee on Trade and Industry, 'Report to Parliament on Public Hearings Pretoria 30 September 1996: Tariff Protection in the Context of Industrial Policy', mimeo

    Republic of South Africa (1996) Growth, Employment and Redistribution: A Macroeconomic Strategy, Johannesburg: Government Printer

    South Africa Foundation (1996) Growth for All World Bank (1993) The East Asian Miracle: economic growth and public policy, Oxford: Oxford University Press

    Notes

    1. Zavareh Rustomjee is now DG, Department of Trade and Industry; World Bank employees were involved in the writing of the macroeconomic policy document Growth, Employment and Redistribution; and several ISP researchers have been directly involved in policy formation.

    2. This definition is used by the World Bank in its study of East Asian economic performance The East Asian Miracle, and enables it to find that government intervention, and specifically industrial policy was ineffectual. This is discussed in more detail in the section on the East Asian experience.

    3. The approach to planning as the co-ordination of policies across Ministries, rather than being limited to the spending of the government budget, characterised the original RDP.

    4. See Fine and Stoneman (1996) 'Introduction: State and Development', Journal of Southern African Studies 22 (1), for a more detailed discussion of these issues.

    5. For example, the case for free trade is reduced, at best, to it being a transparent and enforceable rule, and therefore of pragmatic use to prevent countries engaging in mutually destructive trade wars.

    6. For example, the development of SASOL's oil from coal project provided the basis for the development of heavy chemicals and plastics industries in South Africa, which in turn included fertiliser production for capital intensive farming.

    7. Deficits exceeded 10% of GDP in many countries at different times, such as in South Korea and Malaysia.

    8. Such as through mandatory pension schemes and provident funds.

    9. This includes, for example, the analysis of the ISP.

    10. The following analysis of South Africa's industrial structure draws heavily from Fine and Rustomjee (1996) The Political Economy of South Africa: From Minerals-Energy Complex to Industrialisation.

    11. State involvement continues through IDC loans such as to Alusaf and Columbus Stainless Steel.

    12. One of the most notable changes from the original tariff schedule is the slowdown of tariff reductions on aluminium in order to maintain protection of Alusaf. There may be strong reasons in support of this, as there may also be for maintained protection of other sectors, the point is that Alusaf gained the concession from government, other firms and sectors have not.

    13. This is in effect a continuation of policy shifts made by the previous government in the early 1990s.

    14. Little overall change in employment is the net result of job creation and job loss. These changes vary across sectors and an understanding of the process must be based on an analysis of the factors influencing both flows into, and out of, employment.

    15.Portfolio Committee on Trade and Industry, 'Report to Parliament on Public Hearings: Tariff Protection in the Context of Industrial Policy'.

    Workplace Forums and Autonomous Self-Management:
    A Perspective on Transformation From Below

    By Vishwas Satgar

    Socialism is the future, build it now! SACP 9th Congress Slogan

    Introduction
    Work in the modern South African economy - whether in a factory, on a mechanised farm or in a hi-tech office environment - has generally been characterised by exploitation, hierarchical work arrangements and managerial dominance. Industrial democracy, supposedly realisable through collective bargaining did not, over the past few years, extend beyond a narrow bargaining agenda. Fundamental workplace issues like production planning, investment decisions and work organisation did not feature prominently on the bargaining agenda. However, for the first time in South Africa's industrial relations and labour law history there is an opportunity to fundamentally change decision-making and management within the workplace. This is as a result of the legal provision of a workplace democratisation institution, known as the workplace forum, in Chapter 5 of the new Labour Relations Act (LRA) of 1995.

    With co-determination deeply embedded in the statutory make-up of Chapter 5, the subsequent debate pertaining to the transformative role of workplace forums has amounted to defending and promoting the co-determination thrust of statutory workplace forums. As a result, most mainstream industrial and labour market policy thinking is suggesting joint decision-making or co-management as the absolute horizon of democratisation. Other transformative possibilities are eclipsed. To reopen the debate, beyond equating chapter 5 of the LRA to co-determination, the limitations of co-determination will be highlighted. This is not an exercise in "verbal militancy", nor an attempt to trash co- determination, but rather an attempt to open up the ideological and political boundaries that surround it. It is only through this kind of critical engagement that creative thinking can emerge from the grassroots, within the union movement, to advance worker control and, ultimately, thorough-going workplace democratisation.

    Finally, there is an attempt to locate workplace forums within a transformative vision of worker ownership and control; thus opening up possibilities for worker initiated workplace democratisation, to define a new model for workplace forums that goes beyond co-determination to embrace autonomous worker self management.

    The Limits Of Co-determination

    Most of the conceptual development of labour law in South Africa, over the past decade and a half, has been within a pluralist framework of industrial relations. The co- determination leap in the LRA of 1995, with its value laden notion of co-operation, should be located within the realm of collective labour law and ultimately what can best be

    described as a neo-pluralist paradigm or framework of industrial relations. The main limitation of this paradigm is itsinability to grasp the complexity of the state, both in its political and industrial relations roles. Substituting theoretical abstraction - the notion and assumption of a neutral state - for the complexities of a changing political situation, in which political re-alignments are firmly in motion, is clearly ideologically inappropriate and misleading. An additional limitation relates to the assumption of a power equilibrium being intrinsic to co-determination. This is blatantly blind to the asymmetries in power that emerge from ownership in a market place that is increasingly becoming transnational in terms of market share and equity.

    An economistic Marxist response to the challenge of worker control in the third world has often, in a very reductionist way, concluded that workers are "not ready". The argument against the feasibility of worker control has been based largely on the simplistic conclusion that only workers in the advanced capitalist countries have the "cultured consciousness" to embrace and advance worker control.

    While reductionist approaches like the above rule out worker control in a country like South Africa, local advocates of co- determination, approaching matters from their own angle, concur in ruling out a more radical perspective for the South African working class. For a writer like Karl Von Holdt the co-determination in the context of the workplace forum starts to be the ultimate horizon of economic democratisation. We have here the work-place equivalent of political transition as an exercise in nation building and reconciliation ? the workplace forum become a "power sharing" co- determination.

    The paucity of this perspective emerges when one looks at attempts at worker control in the third world, which have taken different forms, but which have all been initiated by workers from below. According to Munck examples of this are Chile, during the 1970-73 period, when workers began to organise a form of workers' councils and which was later extended into an organisational form called the industrial belt ( cordones industriales). Unfortunately this worker control movement was crushed by the Pinochet led coup. Similarly in Algeria, during the Ben Bella period (1960-65), workers established self-management committees to take over introduction from fleeing French colonialists, but again, this worker initiative was eclipsed by an authoritarian and bureaucratic political elite that emerged within the Algerian national democratic state. A similar fate confronted workers in Iran in 1981, when worker established worker councils, or shoras, were suppressed by the Ayatollah Khomeni. A further rebuttal of economistic Marxism resides in the argument and historical fact that workers in South Africa have been at the forefront of fighting the apartheid regime and, but for organised workers in this country, dual power would not have emerged in the 1980s, enabling a negotiated transition. Even in the 1990s, if it were not for COSATU's mass action in 1992, the deadlock in the CODESA negotiations would not have been resolved. In short, South Africa has a tradition of working class struggle, which has taken unions and workers beyond the factory, to engage on a political terrain that holds out the prospect of transforming society; hence there is immense potential among the working class to democratise the workplace and society, beyond a narrow "workerist " or shopfloor conception of co- determination.

    To pick up on the notion of "workerist co-determination", or a narrow shopfloor centred approach to workplace forums, it is apparent there are serious dangers lurking for the labour movement within this conception and approach to worker control. In explicit terms the labour movement could be co- opted into paradigm of co-operation and finally integrated into the formalism of a legislated industrial relations system. Exacerbating this danger is the fact that in other countries collective bargaining is clearly separated from the co- determination channel. For instance, in Germany, Sweden and Italy collective bargaining takes place in national industrial bargaining forums, while co-determination takes place in the workplace. In the South African industrial relations system centralised bargaining exists in a few industries like clothing and textiles and metal and motoring, but generally it is uneven, with most bargaining arrangements prevailing at company and plant level. With the failure of the LRA to provide legislated centralised bargaining across sectors, while at the same time providing a duty to bargain over co-determination issues, it is likely the dividing line between bargaining and co-determination could become blurred. Thus opening up the way for a cooptive codetermination system. In the end though, watching for this danger is not new to the labour and shop floor tradition in South Africa and was apparent in the opposition displayed by unions to works and liaison committees.

    Beyond Co-determination ? Workplace Forums and Transformation From Below

    The year 1989 was epic because the political geography of the world was fundamentally changed through the collapse of the Second World. Soviet style bureaucratic and authoritarian socialism came to an end. In the wake of this historical turning point, the West has proclaimed the "end of history" and the vindication of the capitalist system. With this kind of ideological refrain, buttressed by the systemic hegemony of the United States over the new global political order, it has become difficult to advance a socialist alternative. Most left wing governments are forced into a politics of survival, and if in the South, the developmental challenge is defined simply as unbridling the market to catch up with the West.

    For the new democratic South African State, with its democratic features of multi-parties, elections, a bill of rights,separation of powers and an independent judiciary, globalisation has presented serious constraints. Contestation of economic policy, and in the main the RDP, has come from different forces within the global order ? the G-7, IMF and World Bank, and Multinationals. In addition most large monopoly corporations, for instance Anglo-American, have gone off-shore which gives them added political leverage against the new state and together with the continued existence of the old apartheid bureaucracy and the globalising pressures, it is politically rational to conclude the South African state is essentially under siege. It has not become , even in a classical sense, a state "for itself". In short, it cannot, by itself, ensure the transformation of South African society and most importantly, ensure a socialist advance (unless it is radically transforms itself and asserts its national sovereignty as a nation state, in the global order.)

    For some South Africans, including previous anti-capitalist intellectuals who have decomposed ideologically and retreated from class engagement, the achievement and even suggestion of a socialist alternative might seem rhetorical. However, for the South African Communist Party- the leading political formation of the working class - and the Congress Of South African Trade Unions, socialism still remains a serious vision and alternative to globalising capitalism. Even at a strategic level the SACP has gone beyond a two-stage theory of revolution, initially developed and espoused by the Third Communist International (formed after the Russian Revolution). This is evidenced in the following :

    ... the socialist transition may well be of long duration. The transition may also be marked by contradictions, stagnation and major reverses. History is never a smooth process, nor does it have a guaranteed outcome... The socialist transition is opened up at the point at which there is a decisive development of... popular democracy to a position of dominance in all spheres - political, economic, social and cultural. South African Communist Party (African Communist 1993 1st Quarter at 15 and 16)

    Simply, the SACP is not about to, now and in the future, smash the state and construct a socialist order on the ashes of the old. Instead the SACP theorisation, clearly, places the prospect of a socialist transition firmly on the national political agenda but it also reflects a commitment to achieving socialism through democratic contestation and process.

    This places the SACP at the forefront of democratic thinking in South Africa by recognising power and ownership relations can only be transformed through thoroughgoing democratisation. Within the Reconstruction and Development Programme this is echoed with explicit mention of "democratising the state" and a "people driven " process of delivery. For industrial relations theory and labour law reform the challenge of thoroughgoing democratisation of the workplace opens up the way for reviving and renewing Marxist industrial relations theory. This paradigm shift suggests democratisation should contribute to the transcendence of the "employer" and "employee" relationship while at the same time ensuring workplace and community relations and workplace and state relations are transformed.

    But, taking forward this challenge, to ensure socialist construction begins in South Africa, requires a transformative strategy that is driven by the democratisation of society from below. It is in trying to assert this that the worker movement has to change strategic gears while at the same time defining, in concrete terms, a new transformative vision and model of worker control.

    Changing Strategic Gears ? The Challenge of Transformative Unionism

    In the new global context, the political transition in South Africa has spawned serious rethinking on revolutionary change. Unlike the past were the "barrel of the gun" served to distinguish paths to power and the strategic model of revolutionary transformation, there is currently a dominant perspective which goes beyond this. At times it is articulated as structural reform or radical reform, which attempts to locate general policy reform for social transformation within a wider process of struggle and contestation, beyond electoralism and parliamentary politics. Basically recognising , within a democratic society transformation is not just the prerogative of the state and solely implementable by the state, but instead at the grassroots, within civil society, social movements and forces also have power and responsibility to advance and deepen reform.

    The strategic emphasis on democratisation within the SACP captures this notion. Within the worker movement especially COSATU, this strategic understanding and perspective began prevailing with more coherence in 1992, under the rubric of "strategic unionism". As conceived by Von Holdt, strategic unionism entails an emphasis on trade union unity, coalitions which extend beyond the factory floor and an alliance with the ANC. The thrust of this strategic emphasis is to try and position COSATU, and the worker movement generally, within the centre of economic policy making but in particular at the coalface of industrial restructuring, within the transition to democracy.

    In political terms strategic unionism, as articulated by Von Holdt, with its emphasis on deepening a programme of radical reforms to advance working class interests, is about engaging capital to foster a class compromise.It is essentially social democratic. Socialism is some kind of abstract future goal within this strategic perspective, which can only be achieved through a two stagism - social democracy then socialism. This becomes even more apparent when one scrutinises the reforms proposed by this framework to overhaul the industrial relations system and ultimately democratise the workplace. In this regard Von Holdt understands co-determination as the most feasible plank of a strategy of worker control that can be achieved, currently, in order to democratise the workplace. In his words : "co-determination is a major breakthrough in the struggle for democracy at work, and for workers' influence in production. By building unions intstitutional power in the workplace , and developing workers' experience in production issues, co- determination provides the possibility for ongoing efforts to expand workers' control. This would be a long-term, gradual and continuos process, involving elements of struggle. Co- determination in other words provides a vehicle for gradual transformation, for continually expanding the realm of democracy at work and in production."

    Now, does history and workplace democratisation have to proceed in such an incremental, "two-stagist" kind of way ? Is it possible that workplace forums, and chapter 5, hold out possibilities for democratisation and transformation that includes and goes beyond co-determination ? To pose the fundamental question and challenge, can workplace forums open up a socialist transition ? This question can only be answered positively if strategic unionism is linked to a socialist conception of transformation that begins now. In other words, socialist construction and workplace democratisation can only happen if COSATU and the worker movement shifts strategic gears away from social democratic strategic unionism to what Langa Zita calls a strategy of "transformative unionism".

    Transformative unionism does not reject the key strategic thrusts of strategic unionism but recognises that unionism cannot be limited to one model or concept, given that it is the level of worker consciousness that would define and realise potentialities within worker and union organisation broadly. Put differently, the extent to which unions utilise spaces to roll back managerial prerogative and ownership will depend on the capacity of those unions themselves. This means, transformative unionism has a different grasp on history and what is feasible for the worker movement in the current South African context. Within Zita's conception this is expressed as follows : " even though the democratic space is never guaranteeable under capitalism its continued expansion and defence , remains the most potent weapon for the ultimate transformation of capitalismthat in this democratic revolution the transformation takes for a lack of a better word an "eclectic" form, a combination of various forms of struggle through varied agency, within a context of appreciating the various levels of determination. That the capitalist society in a democratic context is not irreconcilable with various forms of economic co-ordination"

    In short transformative unionism recognises that democratisation of society and the workplace cannot be limited to co-determination. In other words there are a host of other forms of workplace democratisation, with different degrees of worker ownership and control, which could emerge and be asserted within the democratic South African political order. With this recognition, transformative unionism goes beyond the workerism of social democratic strategic unionism and opens up the possibilities for breaking through and transcending capitalist relations, here and now, such that the system is finally negated. To further unpack this it is necessary to define, as key strategic elements of transformative unionism, a vision and model of workers control.

    Defining A Transformative Vision ? Worker Ownership And Control

    Socialism is dead, long live socialism ! This is the paradox that accompanies the demise of the Soviet model of socialism. Central planning and complete public ownership of property has been discredited as a socialist development alternative. For the anti-capitalist Left, throughout the globe, this has produced an ideological insecurity and retreat. In this context, the triumphalism and proclamations by Western ideologues about the historical vindication of free market democracies has also limited the scope for development alternatives for countries in the South. Modernisation or catching up through export led industrialisation, underpinned by 'free market' policies, has become the new panacea. In addition, "globalisation " within this development discourse has become a politically partisan concept, suggesting the death of the nation state and as such the inevitable assimilation of countries into the global capitalist economy.

    Notwithstanding the ideological crisis and political onslaught confronting the anti-capitalist Left, the end of thoritarian and bureaucratic Soviet socialism heralds a new beginning for renewed and critical redefinitions of socialist practice and ideological concepts. It opens up the possibility to chart a socialist path that would take into account the specificities and historical circumstances that prevail in a particular society. In the South African context this has resulted in an intellectual questioning about the moral and ethical superiority of a socialist alternative, the role of the state, the market, planning and civil society. However, what has been lacking is a rethinking of the notion of property. This is essential because at the centre of Soviet socialism has been a concept of common ownership, which resolved itself as public or state ownership of everything. In political and policy terms this translated into an understanding of socialism as amounting to nationalisation and expropriation.

    Within the SACP, for instance, state ownership and property relations have been fairly well theorised, such that public ownership is not counterposed to private ownership. Nonetheless, thinking through forms of socialised private ownership is only beginning. As a result it is this lack of ideological clarity that has, to an extent, rendered the engagement of the worker movement with privatisation of state assets, industrial restructuring, de-industrialisation and land reform indecisive. Transformative vision and engagement has not made the shift away from state centred socialism and as a result worker ownership and control is not coming to the fore.To open up possibilities for social justice, including economic efficiency and in the ultimate sense a socialist project driven from below, the challenge of socialising private ownership must be relocated at the centre of the democratisation of the workplace. According to Gamble and Kelly there is need to make a distinction between types of private ownership. They suggest "there is an important distinction in discussing private ownership between personal property, goods of final consumption, and impersonal or social property, which includes ownership of productive assets. Private ownership in respect of personal property is almost universally accepted and justified as a condition of personal identity and autonomy. It is the justification of private ownership of impersonal or social property that is contested". Hence, it is only through this ideological breakthrough can there be a coherent vision that would inspire socialisation of non-personal property relations and ultimately worker ownership, through buy-outs, co- operatives and investments either as equity or employee stock option schemes.

    But despite advancing a transformative vision, anchored in a new conception of worker ownership, democratisation of the workplace would be incomplete if it were not informed by an approach and model of worker control. This is so, because borne out by numerous examples, the modern joint stock company has effectively separated management functions from ownership.

    Therefore worker ownership by itself would not resolve the oppression that prevails within hierarchical work arrangements. The rationality of managerial dominance will still reign over the division of labour within the enterprise or even institutions in the public sector. Therefore, to democratise workplaces completely, worker ownership and even public ownership (sometimes referred to as state ownership) has to be accompanied by worker initiated alternatives to managerial dominance ? worker control. For Munck "workers control is thus essentially a slogan in a political strategy which advocates a gradual role by workers in contesting management's `right to manage'. Some of its forms may seem similar to co- management but it aims ultimately at workers self management and thus seeks to avoid integration within the industrial relations machinery". Simply, worker control is a means to dislodge and democratise managerial prerogative such that workers are collectively responsible for running and managing the enterprise. This is integral to a transformative vision of worker ownership, although, in strategic terms, the theory of worker control cannot be realised in a "big bang". Within the strategic framework of transformative unionism, a host of worker participation possibilities within the enterprise are possible and consistent with realising autonomous worker self-management. While, at the same time, this does not preclude the immediate realisation of autonomous worker self-management within certain situations.

    What does this mean for chapter 5 and workplace forums ? Alternatively expressed, how can workplace forums become organs of worker control ?

    Essentially these questions enable a departure from theory into the realm of the practical and an attempt to define workplace forums as a worker control model.

    Workplace Forums As A Worker Control Model ? Co-determination And Autonomous Self Management

    The emergence of a new democratisation institution in the workplace, is bound to be embroiled in struggle. Employers are definitely going to resist the inroads into managerial prerogative and besides trying to thwart these iniatives, concerted attempts would be made to institutionalise workplace forums within a co-optive framework. Without a clear perspective on what should be achieved, by the union movement, this could end in disaster, with institutions that are flawed and controlled by employers. With Chapter 5 of the LRA trying to strike a balance between legal regulation and voluntarism several models could emerge. The first is a statutory model with two variations, developed as follows :

    a) through prescription if the parties fail to reach a "voluntarist" agreement and which requires the CCMA to establish and define a workplace forum in terms of Chapter 5, read together with the Guidelines For Establishing Workplace Forums, contained in Schedule 2;

    b) through the statutory provisions for trade union based workplace forums, which would allow the competencies of workplace forums to be conferred on shop steward structures.

    According to Halton Cheadle, " first prize should be a thousand voluntary workplace forums rather than statutory forums." In other words this is the second model that is mitted by the LRA and it allows for collective agreements , outside of the statutory framework. It is this model that holds out the prospect of going beyond legislated co- determination and ultimately subverting the rationality of hierarchical management, in both the private and public sector. Essentially, it would allow parties to define a workplace forum, that is trade union centred, but which allows for autonomous self-management. In practice this could, broadly, have two variations.

    The first is a completely autonomous self-management workplace forum , which would allow skilled and unskilled workers to run an enterprise, public service unit or co- operative. For example, in the public service an autonomously self-managed workplace forum can be established in a school. This would bring together skilled and unskilled workers into managerial realm of the school. Besides this collective forum, interfacing with parents and other communty participants it could decide on work schedules and education policy issues relevant to the school, it could also work out accountable, transparent and participatory ways of managing the administration of the school. Similarly in a primary health care unit or even a police station, workers can self manage their work. Another example is a de-industrialised plant, which if taken over by workers could be managed through a workplace forum that is designed to allow the workers to autonomously self manage the plant. Internationally there are numerous examples of this kind of worker control. For instance, Lucas Areospace was a company renewed by shop stewards who took over production by developing a corporate plan. In India, workers in a factory called Kamani Tubes took over ownership of an ailing factory and autonomously self managed it, into a viable industrial unit. Essentially, in this kind of situation the law of value is fundamentally changed. Labour power is no longer an exchange value and input into production for profit maximisation. Rather it becomes a socialised outcome of production.

    Another variation of an autonomous self management workplace forum, is one which not only allows for co-determination over certain issues but at the same time also has an autonomous self management competency and agenda for workers, within that particular enterprise . For example, in a parastatal or large conglomerate, like Anglo American, an autonomous self management workplace forum can be agreed to which allows for co-determination on investment decisions, production planning, work re-organisation and technology use but autonomous self management on affirmative action policy, training and health and safety issues. The challenge with this variation of autonomous self- management is to struggle to achieve a full and complete self-management agenda that eventually transcends the co-determination competency. This would become likely if workers also address the ownership dimension of the enterprise, at the same time.

    Conclusion

    State centric socialism has been discredited. In the South African revolution this has been acknowledged and a new revolutionary model of structural reform has emerged. This does not deny a transformative role for the state, but recognises the political and transformative importance of forces in civil society.

    In addition, given the present constraints on the emergent National Democratic State, the imperative of a transformation agenda driven from below, as opposed to, together with the state, becomes essential. In this regard, a transformative strategy for unionism with a vision for worker control and ownership and an autonomous self-management workplace forum model would fundamentally change the mode of production in South Africa. Socialism will not just be constructed by state ownership, which would also have to be democratised, but would have to be accompanied by democratisation and socialisation of production relations, from below, even if it is mapped unevenly within South African reality. This would open up the space for a `worker and community sector' in the economy. In short, workers have to push boundaries beyond co- determination, now. There would be no guarantees of success but experiments, initiative and creative innovation by workers is what is required now and over time. It is the knowledge and experience accumulated from all of this that would make socialism the only viable alternative.

    Towards a progressive transport policy

    Leonard Ramatlakane is SACP chairperson in the Western Cape and the MEC for Transport and Public Works in the province. He outlines some of the challenges facing us in tranforming transport to meet popular needs.

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    partheid shaped every aspect of people's lives. It created a highly formalised and structured society, in which the overwhelming majority were condemned to structural impoverishment. We are now confronted with the challenge of how to structure our urban areas so that they become more efficient and socially just. What transport policies should we adopt which will lead to a vastly improved yet affordable public transport system? Key considerations are how to contain the unlimited growth in private vehicle use, how to limit the expenditure on new roads, and how to oncentrate on the provision of those roads necessary to integrate previously isolated communities.

    How do we do these things in ways which create jobs, and in which we are able to foster growth and development, and record advances in reconstruction and redistribution? The RDP, adopted by the ANC/SACP/Cosatu alliance, sees public transport as a basic need that must be met (see section 2.9).

    The White Paper on Provincial Transport Policy of the Western Cape Department of Transport and Public Works is the first ever attempt at the provincial level to address these issues. It understands the consequences of the past and the disarray that exists in virtually every aspect of transport planning.

    On the question of management and operations, the White Paper recognises that improvements on the scale necessary will not be achieved merely by tinkering with the more obvious symptoms of distress, or by making the existing rotten arrangement more efficient.

    The White Paper recommendations and the direction which is taken broaden out the policy debate from the current considerations of economic and operational efficiency, to the particular role transport should play in the attainment of specific reconstruction and development strategies, and the realisation of the spatial development policy. This ensures that transport investments are developmentally effective and are justified in relation to the opportunity costs of investments in other sectors.

    Transport must no longer be seen in isolation, but as a means to an end, namely the attainment of broader development aims. Unless policies which are essentially interventionist are adopted, inequities and inequalities will be perpetuated, and the majority of our people will remain condemned to a life of dependency.

    This cannot be allowed to continue. We must break decisively with the idea that private transport is going to be the solution for all. The majority of workers do not, and will not in the near future, own their own private cars. We need good public transport that is safe, accessible, affordable and efficient.

    The policy of our White Paper is that land price speculation should pay for public transport through a tax on undeveloped land that is being owned simply for speculative purposes.

    The central theme of the policy is our call for Public Transport First. We are also calling upon civil society structures to help to formulate a Public Transport Social Charter, that will describe the type of service that must be provided by the public transport operators, and which will help us to measure the quality of output.

    The policy also promotes the establishment of development corridors that create more jobs directly and indirectly. The policy proposes that private vehicle licence fees and parking charges be increased to more realistic levels. It also proposes a parking tax on all long-term private and public on- street and off-street parking.

    More realistically priced user charges in the private vehicles market will correct pricing anomalies that have been allowed to occur over the last ten to fifteen years. In turn these anomalies have resulted in a cost to the public in terms of pollution, congestion and accident costs. South Africa is amongst the lowest in the world in terms of a number of fees, including licensing fees.

    (For those who want to read the White Paper policy document in detail, it can be obtained via the Internet at http://www.polity.org.za/govdocs/white_papers/transpwc.html)

    Government support for a people-driven housing process

    Responding to the massive housing shortage in our country has proved to be one of the most difficult challenges of the new ANC-led government. Tebogo Phadu writes about growing involvement of communities in their own housing development, and government's attempts to support these initiatives.

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    his year, the Housing Ministry has targeted about 200 000 houses for the poor. But meeting this target will largely depend on the commitment and ability of the commercial banks to provide loans to the poorest of the poor, and on the co-operation of the construction industry. For the last three years, the poorest of the poor, who make up some 70% of the total homeless in South Africa, had difficulty in accessing the private sector, developer-driven housing delivery programme.

    This delivery programme favoured the middle strata and better- off sections of the working class, who earn more than R3500 per month. Last year this programme was subjected to a process policy review, through the Ministerial Task Team, aimed at accelerating housing delivery to the "the lower end of the market" - the 70% of the homeless in South Africa. Organisations like COSATU have been very vocal on the need for such a review, and called for a public housing company or parastatal.

    The most notable policy shift from government is around support for the people-driven housing movement which has emerged in the last five years. Based on the tradition of Burial Societies and other co-operative schemes in the townships, the poor and the working class are mobilising their own resources, skills and energies through co-operative savings schemes to add to the government housing subsidy. In various parts of the country, particularly in Gauteng, Eastern Cape, Free State, Kwa-Zulu/Natal and North West, hundreds of housing saving schemes have been organised by the poor (most of whom do not have access to credit through commercial loans). These housing saving schemes cover more than 60,000 families, and they have contributed to more than 800 houses being built.

    Most of the houses built by the homeless are decent and relatively large, between 50 and 60 square metres. With the help of a progressive local NGO called Peoples Dialogue, about 500 housing savings schemes have established a networking organisation known as the South African People's Homeless Federation, which has established a revolving fund mechanism called uTshani Fund (meaning grassroots fund) to finance the poor. Last year, the national Housing Ministry gave R10 million to it (but the Federation says this is not enough) to support its savings-driven housing programme.

    In her programme for the year, Doing Justice To Delivery, Minister Sankie Nkondo-Mahanyele states that given "the prevalence and acuteness of poverty, the people's housing process offers possibly the best opportunity for more than half of the homeless population to gain access to adequate housing".

    The government is also looking at establishing a People's Housing Partnership - with some donor funding - to meet the pressing need for institutional capacitation and empowerment in provincial and local spheres of government, and among community based and non-government organisations.

    While the support for the people-driven housing process has not yet become widespread, there is a space for this innovation and other people-driven initiatives which promote self-empowerment (perhaps the real meaning of black economic empowerment) of the poor and the working class. Government is planning a series of events this year and next year to popularise people-driven activities as part of our broader and revitalised Masakhane Campaign. Among the initiatives government has taken up is the Masakhane Presidential Awards, intended to acknowledge those communities, such as those in the South African Homeless People's Federation.

    The ANC has also identified the theme of people-driven development projects - as part of its annual programme - to highlight and, if possible, inspire such community initiatives.

    (For more information on the Presidential Awards, contact Lulu Tabane at O21-45 2225 , Office of the President )

    No such thing as a neutral state

    I wholeheartedly agree with the joint assessment by Blade Nzimande and Jeremy Cronin of the ANC discussion document "State and Social Transformation" (see their critique in AC 146). Of course, their own concept of a national-democratic developmental state, "ALIGNED to a progressive/worker dominated movement", needs to be further discussed and defined.

    The social-liberal and social-democratic conceptions of the state are very similar. The founders of social liberalism, Thomas Green and Leonard Hobhouse, viewed the state as a class-neutral arbiter, and regulator of the "common good."

    Their ideas provided the theoretical foundation for Australia's statehood in 1901. Australia was the first country in the world to adopt five of the six demands of the English Charter. It was also the first country to adopt the principles of arbitration and the basic wage. These principles of "industrial democracy" became part of Australia's constitutional framework. In Australia, the state is the "impartial" arbiter of industrial disputes. It decides what is in the "common good". This class-neutral conception of the state is widely accepted among the working class and trade union movement here.

    The old social-democratic conception of the welfare state is clearly outlined in CAR Crossland's The Future of Socialism (1956). On the question of the state, Crossland states that Marx got it wrong. "Whatever the modes of economic production, economic power will, in fact, belong to the owners of political power" (p. 10). That is, all we need to do is elect a social democratic government, and it will control economic power.

    Despite both conceptions of the state being introduced into Australia, the capitalists still own the main means of production. The Labour Government of 1983-96 sought to retain the social liberal state, but openly pursued policies of neo-liberalism. And today, under our Liberal Government, the "class-neutral" state is currently attempting to coerce trade unions into refraining from "political" activity. Apparently, the "political" activity of some trade unions is contrary to the whole (social liberal) concept of trade unions, that is, as representatives of workers'"economic" interests.

    All the best, Simon Stevens, Australia.

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