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Issue 144 - Second Quarter 1996

CONTENTS

An international perspective on the "people-driven" character of the RDP

Patrick Bond looks at the formidable challenges facing attempts to defend the progressive implications of the RDP. A version of this paper was presented to the RDP Council National Workshop in March 1996. Bond is a senior researcher at the National Institute for Economic Policy.

Even if the "people-driven" character of the RDP is not challenged openly, it is - by all accounts - being undermined by timid politicians, hostile bureaucrats and unreliable private sector partners. This is not unusual, if one scans the globe at present, progressive visions of development are badly blurred even in societies that have recently won hard-fought transitions to democracy. This paper attempts to place the RDP in an international context. The main ways to compare the RDP with international experiences are through 1) locating the ambitions of the Democratic Movement in the context of "globalisation" and "neo-liberalism"; 2) considering past international approaches (theoretical and practical) to macroeconomic and national development strategies; 3) identifying the main currents that run through social policies across the world; and 4) relating all of the international issues raised back to the RDP itself. This exercise may prove useful both if it helps SACP and Mass Democratic Movement comrades revisit the "Great Economic Debate" and if we can explore two themes for reinforcing the transformative, people-driven character of the RDP: a) "decommodifying" basic goods and services; and b) ensuring that social and economic policies do not "stratify" South African society any further than is the case already.

The international neo-liberal context

"Never before have so many political movements of the progressive left been so close to taking power," Ruben Zamora, a leader of the Salvadoran democratic movement, recently remarked, "but never before has power seemed to be so strongly predetermined by external forces adverse to the interests of the majority." The disappointments are profuse, not just from the left but from other movements which had rallied under the banner of colonial, racial or ethnic liberation, human rights, anti-corruption, and other forms of the much-heralded "transition to democracy."

Are the policies of neoliberalism - extremely high interest rates, shrinking government spending in relation to the entire economy, privatisation of state assets, lower taxes for business and higher VAT for consumers, export-led industrial policy, lifting of tariffs, deregulation of business, cost recovery on social services, and many others witnessed recently in South Africa - inevitable?

There is, by now, a sense amongst some MDM cadres that "There Is No Alternative": TINA, as Margaret Thatcher remonstrated. Nevertheless, if one listens closely to ordinary people both in South Africa and across the world, there are also resounding cries emerging: THEMBA! (Zulu, for hope), "There Must Be an Alternative!" Some policy-makers have picked up on these cries and tried to articulate alternatives to neo-liberalism. These can be found not only in much of the RDP, but in documents such as the African Alternative Framework to Structural Adjustment Programmes for Socio-Economic Recovery and Transformation, the African Charter for Popular Participation in Development and Transformation, and The Kampala Document: Towards a Conference on Security, Stability, Development and Cooperation in Africa.

The time is ripe for revisiting the larger questions. The "Washington Consensus" (as neo-liberalism is sometimes termed) is fraying not because progressive alternatives are being taken seriously yet. Instead, neo-liberalism is beginning to self-destruct due to major internal contradictions. As ruptures (such as the Mexico meltdown of 1994-95) appear, new counter-challenges to free market orthodoxy may be feasible.

Some leading theorists of global political economy argue that these will emerge not through trying to creatively manage the nation-state or national economies out of their crises. Instead, as Giovanni Arrighi, Terence Hopkins and Immanuel Wallerstein insist, the most serious challenge occurs when "popular movements join forces across borders (and continents) to have their respective state officials abrogate those relations of the interstate system through which the pressure is conveyed."

The January 1, 1994 challenge by the Zapatista movement in Chiapas, Mexico to the North American Free Trade Agreement and all that it implied, is instructive. Even more so, in Haiti, the anti-privatisation campaign by the leading popular organisations begun in August 1995 - implicitly encouraged by Aristide - rose to such heights as to drive out the neo-liberal prime minister by October and led to a substantial disruption of Haitian relations with the international financial agencies.

The other theory that has proven popular amongst social democratic parties is that globalisation - the dramatic international expansion of trade, investment and financial relationships - must be embraced, and that the task of progressives is to ensure that their workforce and products are competitive in world trade (this is the position that many South African progressives have taken). Competitiveness often entails enormous sacrifice, however, and may not be successful even then. It is also potentially suicidal for otherwise progressive political parties to try to manage this process, as those in Australia and Spain recently learned.

Clearly, better global coordination of forces that oppose neo-liberalism is required, which compels us to consider the kinds of campaigning now emerging from progressive forces located in both governments and civil societies. There remain distractions to such coordination, for some powerful international organisations remain concerned mainly with attaching a "human face" and "safety nets" to structural adjustment (these institutions include the UN Conference on Trade and Development, which is chaired by South Africa for the next four years).

But some coordination - especially building regional economic relationships - can still occur. At the level of inter-governmental relations, the "G-77" developing nations continue to revive parts of the 1970s call for a New International Economic Order, as well as to tackle new problems such as the chaos caused by unregulated international financial markets. There are also efforts, which South Africa's Department of Trade and Industry has endorsed, to establish South-South trading networks that enhance the power of the Third World in what is otherwise an extremely inhospitable World Trade Organisation.

Likewise in civil society, global challenges to neo-liberalism - including but not limited to demanding that governments break relations with the interstate system - are increasing daily. Two are worthy of mention. In late 1993, protests against the General Agreement on Tariffs and Trade shocked many countries in both the North and South, with many hundreds of thousands of people demonstrating for the resignations of leaders who signed the document (leading, indeed, to the firing of top officials in India and South Korea).

Second, in 1994, on the 50th anniversary of the International Monetary Fund and World Bank, a "50 Years Is Enough" campaign was launched by progressive international development organisations and social movements (with the formal support of many South African organisations) to fundamentally reform the two Bretton Woods Institutions. Today, a more radical proposal - defunding and actually shutting down the World Bank - is on the agenda (due in part to growing hostility and xenophobia amongst conservative American politicians, which make defunding a distinct possibility).

Many progressives are now debating whether it may be time to rethink the Bank reform strategy, since minor battles won by development NGOs, environmental organisations and churches - such as the inclusion of gender-sensitivity in more than a quarter of all projects and programmes, the recent rescission of funds for the Narmada and Arun dams in India and Nepal, full-blown programmes to incorporate NGOs and even CBOs and social movements in Bank projects, and the Bank's more open stance regarding public access to information - are still unsatisfactory. Such victories have not altered the Bank's insistence that countries adopt neo-liberal social and economic policies, and hence other critics are coming to the conclusion that the time for a campaign to shut down the Bank is now ripe. Vigorous work along these lines - for example, through anti-apartheid-style divestment (of Bank securities purchased by government, pension and university funds) in the North and popular boycotts in the South - is eminently feasible, and has already begun.

It remains to be seen whether in coming months and years, the 50 Years Is Enough network comprising Northern groups and dozens of excellent grassroots social movements which have fought and sometimes won concrete, people-driven development struggles against the Bank - from Haiti, India, Mexico, Nepal, Nicaragua, Papua New Guinea, the Philippines, Southern Africa, to name a few sites of intense recent activism - can come up with a consensus and cohere as an international movement. If this does occur - if, in other words, those local and national social movements finally begin thinking globally, acting locally and acting globally - it will be because the many contradictions of global neo-liberalism include the globalisation of opposition to neo-liberalism.

Macroeconomic and national development debates

At least some of the opposition must be intellectual in character. And yet, as Canadian scholar David Moore puts it, oppositional analysis advanced by "counter-hegemonic movements" has been "too easily co-opted into the dominant discourse," to the extent that "new delineations of terms and new strategies are required." This is the case with respect to the full range of concepts - development, democracy, community, sustainability, equity, participation, empowerment, decentralisation, etc. - deployed within such movements, which are now bandied about just as earnestly by neo-liberal theorists as by socialists. Indeed it is precisely the easy, populist appropriation of such terms that makes it all the more crucial to resurrect the development debate, especially in SA.

The inadequacies of existing development theories - ranging from modernisation and dependency theories internationally, to many of the race-class debates locally - need not detain us here. Is there another intellectual approach? I argue that the theory of "uneven development," though itself somewhat underdeveloped in SA, offers a much better approach to addressing the challenge of people-driven development.

To establish a baseline within the "absolute general law of capitalist accumulation," recall Marx's argument that uneven development is a necessary process of capitalism: "...that in the same relations in which wealth is produced, poverty is produced also; that in the same relations in which there is a development of the forces of production, there is also the development of a repressive force; that these relations produce bourgeois wealth, i.e. the wealth of the bourgeois class, only by continually annihilating the wealth of the individual members of this class and by producing an ever growing proletariat."

Not much intellectual work has been done to take these insights further, although more than two decades ago, Arrighi and John Saul drew our attention to: "uneven development thrown up by capitalist penetration in Africa. For the underdevelopment of Africa as a whole relative to the industrial centres of the West has been accompanied and mediated by uneven development as between regions, states, tribes, and races within Africa itself, and this fact adds important dimensions to the class struggle in Africa and to the character of the resistance of progressive African forces to contemporary imperialism."

Using the theory of uneven development, Marxist analysts attempt to track flows of capital and resources across space, across sectors of the economy, across scales of economic policy determination (global, regional, national, sub-national, local), and across time. In doing so, we can unveil the material basis for an area suffering poverty - whether this is primarily the result of extraction of raw materials, changes in terms of trade, migrant labour systems, varying returns to investment, unsustainable flows of finance, geopolitical alliance formation and the like. The theory also hints at how a strong, progressive developmental state might intervene to address such uneven flows of resources, and hence overcome the sorts of macroeconomic and microeconomic "disarticulations" and "disproportionalities" that accompany uneven development.

What, though, is a developmental state? There are many divergent lessons to be drawn from the international development literature, usually depending upon ideological predilection. Contesting these lessons, even in passing, remains an important task.

Indeed, an important reason that neo-liberal compromises characterise so much of SA's transition is that there were so many selective justifications drawn from across the world. In most socio-economic sectors, ascendant policy-makers from the Democratic Movement have been inundated with "market-oriented" propaganda, often in the course of all-expenses paid tours funded by international financial institutions and development agencies. The three words "international experience shows" - the preferred preface in any number of didactic briefing sessions and reports sponsored by the major agencies - were typically followed by glowing praise for federalist constitutional frameworks (referencing the USA and Germany), export-led growth (Taiwan, South Korea), invitations to foreign financial investment (pre-crash Mexico), privatisation (Britain), low wages (China), high real interest rates and an independent (i.e., oriented to commercial banks) central bank (Germany, the USA), tariff-reduction (India), market-oriented affirmative action (i.e., building a black petty bourgeoisie) (Malaysia), social contracts (Mexico), site-and-service schemes instead of housing (Chile), and more generally, the demise of statism/"socialism" (Eastern Europe, Africa).

If we consider simply the East Asian "Newly Industrialising Countries", debate continues to rage over whether (as neo-liberals insist) the lessons relate to a visionary export-led manufacturing model with rigid labour control and outright political repression in some cases, or whether (as progressives occasionally counter) NICs like South Korea teach us how to keep multinational corporations out of the country, how to nationalise the banks, how to direct credit into particular industries even if the rate of profit is lower, how to subsidise credit, how to control industrial policy and assist patriotic enterprises through a strong state, how to accomplish fairly widespread land reform, how to impose exchange controls, and so on. Clearly the lessons are in the eyes of the beholders.

There are also many lessons from societies whose rulers described the national project as "socialist," and it may be useful to mention specific strengths and weaknesses of development strategies in the East Bloc (characterised by rapid industrialisation and the satisfaction of most basic needs, but also by an excessively powerful military-industrial complex, low quality of consumer goods and political repression) and in Cuba and some other Third World revolutionary societies (sometimes characterised by participative, people-driven processes of meeting basic needs, but also often by a lack of both liberal freedoms and effective socialist planning).

Finally, there are the historical lessons of reconstructing Europe after World War II, and of the strategy of the US (and Nazi Germany) during the 1930s: Keynesianism. This approach is to engage in extremely high levels of deficit spending by which infrastructure, social services and productive activity are all heavily subsidised by the state. Along with these state spending activities (which were never particularly people-driven) came regulation of trade and finance.

The British economist John Maynard Keynes offered the following argument regarding trade, which may be relevant in view of South Africa's growing trade deficit (especially with regard to luxury goods and machinery, some of which could be produced locally with appropriate support): "I sympathize with those who would minimise, rather than with those who would maximise, economic entanglement among nations. Ideas, knowledge, science, hospitality, travel - these are the things which should of their nature be international. But let goods be homespun whenever it is reasonably and conveniently possible and, above all, let finance be primarily national."

Keynes' point on capital flows has great relevance to SA in early 1996, in the wake of massive capital flight, the dramatic crash of the currency, and amongst the highest interest rates in the world. Regrettably, the volatile currency fluctuation that is the logical result of the Reserve Bank's ongoing loosening of exchange and capital controls was analysed by South African commentators as a signal to engage in further liberalisation. In contrast, following the Mexico currency crash of 1994-95, even the International Monetary Fund drew the lesson that more rigorous capital controls should have been applied.

In SA today, the dominant ideologues of macroeconomic policy have little regard for (and perhaps inadequate awareness of) the importance of classical Keynesianism, the successes of the East Bloc, or even with the NIC model of a strong regulatory state. None of these development models are optimal or even desirable, of course. But the interesting aspects of their legacy are being evacuated by economic policy wonks infatuated with the idea that "There Is No Alternative."

However, though neo-liberal macroeconomic policy appears to be well-entrenched in SA, when we move to social policy we can identify two other currents, as well, which bear some international comparisons.

Three ways of organising a developmental state

In general terms, there are three philosophical approaches to the social policies that define a developmental state: neo-liberal, corporatist and progressive.

First, the neo-liberal approach typically stresses the market as the main organising principle and agent in the state's delivery of goods and services (the state must intervene only to facilitate the operation of the market).

Second, the corporatist approach is typically based upon large-scale social actors (big government, big business, big labour) agreeing upon systems that deliver goods and services, at least to their constituents if not to the society as a whole.

Third, the progressive approach typically aims to establish basic goods and services as entitlements, and to organise society in a manner that lowers inequality and empowers the powerless.

The first approach is most often associated with Anglo-Saxon countries (the US, Britain, Canada, Australia and New Zealand); the second with middle-Europe (Germany, Austria, France and Italy); and the third with northern Europe and Scandinavia (Holland, Sweden, Denmark, Norway and Finland). The differences in these three approaches tend to reflect the balance of power between conservative and progressive political parties, which in turn reflects the balance between the relative mobilisation of the working-class and the coherence between working-class organisations (especially labour and other social movements). Of great importance, historically, was whether progressive mobilisation included an alliance of workers and farmers (the so-called "red-green" alliance in Sweden), or whether rural interests were represented by a conservative political party (as in Austria).

SA's legacy and present situation is mixed, with whites traditionally having access to state-supplied goods and services as entitlements, with corporatism on the agenda since the early 1990s, and with neo-liberal forces extremely powerful in the determination of many detailed policies. The RDP's social policies are largely entitlement-based. The central factors in future are probably whether or not the organisations of poor and working-class people can be strengthened again, and whether urban and rural, and "insider"-"outsider" interests can be fused, during the course of the development of the so-called corporatist institutions (NEDLAC). Much of the experience in post-independence Africa has been negative regarding both these components.

The RDP provides some mixed signals as to which of the three approaches becomes official policy, for it reflects the third approach in its detailed social policies, the second approach in some of its rhetoric (especially relating to "social contracts"), and the first approach in its macroeconomic policies. By looking at two additional features of social policy, and considering how these have been addressed in SA over the past two years, it should be possible to thematically assess social progress in the implementation of the RDP.

The two themes are "decommodification" and "stratification." As explained by the leading analyst of international social policy, Gosta Esping-Andersen: "Decommodification occurs when a service is rendered as a matter of right, and when a person can maintain a livelihood without reliance on the market" while stratification refers to "the relationship between citizenship and social class," especially whether or not a society provides universal access to basic social services not dependent upon class or other factors.

The argument is relatively simple. The neo-liberal model entails low levels of social benefits, and where there are benefits these are associated with social stigma, forcing people into the labour market even if they are physically or otherwise incapable of working. In order to split poor and working class people - and to ensure that popular perceptions of entitlements are kept to a minimum - neo-liberal social policy typically imposes "means tests" (income-related benefits) so as to prevent entitlements from becoming universally recognised.

To illustrate, in SA at present, means tests are applied to the following areas: housing, land reform, legal aid, educational bursaries, and pensions and maintenance grants. The Department of Welfare's social grants were subject to a uniform means test from March 1996 (prior to which there was a racial bias). In the past, most homelands did not implement means tests. Moreover, provinces have not had any incentive to do so in their social spending, because the funds they receive from central government are not subject to affordability criteria. There is, hence, a proposal in government to review all means tests to ensure the poor are targeted.

The progressive approach, in contrast, is to continually expand the sphere of social rights and entitlements, so that means tests become less and less relevant to a society's social policies and so that poor and working-class (and even middle-class) people maintain a sense of unity of purpose in making social demands upon their government. Health services were recently decommodified, so that even the wealthy can get free primary public health care at state clinics. In addition, civil servants and academics often enjoy broader entitlements, and white-collar workers have come to accept that their employers will provide extensive health and pension benefits (although this practice tends to weaken the bargaining power of labour, since workers are now more dependent upon employers in the event that the government does not have a fall-back plan for health, pensions, maternity leave, educational leave and the like).

However, to adopt the progressive approach as a general principle for organising social policy requires us to compare societies' wealth (eg, per capita GDP) and level of industrial development, and to assess how the "social surplus" generated by this wealth and development is being shared. In Scandinavia, the distribution of wealth has been fairly equal over the past century, including the period when per capita GDP was what SA's is today (roughly US$2,500). This permitted a more generous, universal approach to social policy. In contrast, in the United States, distribution of wealth has always been more unequal, and that meant that when major social programmes were introduced during the 1930s for the first time, as well as during the 1960s, the elite fought the introduction of universal benefits and instead continued to push for market-oriented programmes. As a result, alone among advanced industrial societies, the US continues to lack a health insurance programme. But this is not because it is impossible for the US economy to afford such a programme, but rather because in practice the balance of social power that accompanies unequal distribution of wealth prevents the poor and workers from winning their social policy demands politically.

Equality is not the only factor. Absolute levels of wealth are just as important, and thus while the social benefits envisaged in the RDP may be appropriate and affordable to SA, they would not be for Mozambique. Indeed this brings us back to the currents within the RDP itself, and whether - in the present conjuncture - demands for universal, entitlement-oriented social policy can be launched from the base document.

What does this mean for a people-driven RDP?

Like all policy documents associated with SA's transition, the RDP contains internal contradictions, specifically an uneasy mix of the three approaches to both social and economic policies that have been reviewed above.

It should be clear that the conservative macroeconomic policies have been adopted nearly to the letter - even more so regarding foreign exchange liberalisation, Reserve Bank "independence" (insulation from democratic inputs), trade liberalisation and supply-side industrial policy - while the progressive components of the RDP have nearly all been ignored thus far. Meanwhile, the centrist, corporatist rhetoric remains as strong as ever - but at least that potentially leaves open the door for progressives to achieve some victories (or at minimum, greater access) in corporatist bargaining institutions.

If progressives are intent on strengthening the progressive currents in the RDP and on opening up debate within the corporatist and against the neo-liberal currents - while on the contrary, neo-liberals seem intent on ignoring the RDP's progressive components and instead implementing neo-liberal policies absolutely everywhere (and corporatists worry about their lack of real significance, particularly in NEDLAC) - then a strategy must be developed that is conscious of why the progressive RDP has not thus far been implemented. Is the primary challenge to the RDP's implementation one of government's failure to achieve "strategic coordination"? Is it the "bureaucratic, technocratic stifling of the RDP vision"? Is it finding "the right balance between our own specific sectoral/constituency concerns and the bigger South African (even Southern African) picture"? Is it the challenge of driving "a strategically coherent transformation programme through the host of multi-party participatory forums"?

The challenge may lie in resolving all of these specific problems, as the "Rebuilding the MDM" document argues. But I would argue that two other crucial challenges emerge from the discussion of international comparisons. First, the balance of forces must be assessed and the strengths and weaknesses of the Democratic Movement carefully explored. I believe that this is a larger task than understanding the "logistical" limitations - redeployment of cadre into new positions, the decline of external funding support, and the need to shift from anti-apartheid to pro-development strategies and tactics - spelled out in the "Rebuilding the MDM" document.

While these logistical issues are critical, we are also long overdue in addressing the philosophical approaches to demands being made by Democratic Movement organisations. In particular, those demands must be evaluated in light of whether they interrelate and strengthen each other's universal, decommodifying and destratifying approach, or whether they contribute to the commodification of basic goods and services and to the fragmentation of poor and working people. In short, it boils down to whether MDM policies are actively contesting (as opposed to contributing to) uneven development. Such debates occurred to some extent during the 1980s and early 1990s (for example, over whether accepting company-provided housing or health programmes would undermine the broader struggle for public housing and nationalised health care), but are not much in evidence today.

The second additional challenge is to more closely examine the approach behind detailed policy positions taken since May 1994. Those policy positions have largely been based on neo-liberal, market-oriented principles, not merely in the sphere of macroeconomics, but also regarding policies on housing (bank-centred, developer-driven, with an inadequate subsidy), urban infrastructure (based largely on cost recovery and substandard service provision, as designed by the World Bank), land reform (again, World Bank-designed, based on individual titles, and far short of RDP commitments), and so many others.

What continues to surprise me is that social policies expressed in Green and White Papers repeatedly ignore - and often outright contradict - the detailed provisions in the RDP, in large part because the official policies are increasingly geared to the commercialisation of state-provided goods and services that in the past were universal entitlements for whites. Partly this is a function of the fact that old-guard bureaucrats or yuppie consultants are being given exorbitant roles in policy drafting (and under the constraints of sectoral compromises that are often far too generous to the interests of capital). But partly it reflects the fact that progressive forces in civil society have provided only sporadic reminders - whether in the form of policy advocacy, demonstrations, best-practice pilot projects or political interventions - of deviations from the RDP.

Indeed, it is common these days to find trade unionists, students, urban residents, landless peasants, development activists, primary health care advocates, environmentalists, international solidarity activists and many other sectors of the Democratic Movement increasingly alienated from the official government departments they are meant to interrelate with. Given the lack of access to policy-making, the destaffing problem, and the drainage of previously-available financial resources (leading to countless NGO funding crises), it is becoming evident that the progressive watchdog flank in civil society is waning.

Many powerful forces in government and business don't particularly care. Some relish the opportunity to explicitly break RDP promises that "consultation and joint policy formation must continue as the RDP is developed into an effective programme of government" (1.1.4); that "organisations within civil society that participated in the development of the RDP will be encouraged by an ANC government to be active in and responsible for the effective implementation of the RDP" (1.1.5); and that "social movements and CBOs...will require capacity-building assistance... [which] should be developed with democratic government facilitation" (5.13.2).

In sum, I think there are now two additions to the already demanding work progressive policy advocates face within the RDP Council: coordinating approaches more closely so that policies are more closely aligned (rather than continually treated sector-by-sector), and more actively watchdogging the progressive components of the RDP. In these respects, international development experience may be helpful to assess

  1. a) what it will take for progressives in South Africa to link up with progressives elsewhere to challenge the globalisation of neo-liberalism (which after all is ultimately the primary enemy of social progress);
  2. b) what kinds of progressive macroeconomic and national development strategies South Africa will need to undergird growth, job creation and the redistribution of wealth, and how to get debates going and actually win these debates; and
  3. c) how to coordinate our approaches to social policy so that they emphasise universalism, decommodification and destratification.

While this paper may have laid out the argument in an abstract and somewhat academic manner, it should be clear to all concerned that it is of utmost practical importance that the Democratic Movement begins a process of political and policy alignment, just as government is doing through the NGDS, so that debates can begin in earnest. After all, the whole world is watching South Africa for inspiration and guidance, in moving from TINA to THEMBA in the next round of people-driven development struggles.

Job creation - the role of the public sector

Philip Dexter, MP and SACP central committee member, argues that without an expanded public sector there is no possibility of resolving the massive unemployment crisis in our country.

The current debates on job creation focus on various policy measures that essentially add up to attempts to tinker with the market in a capitalist system, hoping to unlock resources and open up initiatives for creating employment. Whilst such attempts are not to be dismissed, we should be mindful of their shortcomings.

Briefly these can be summarised as follows:

  • they rely on the goodwill and cooperation of capital, and are therefore vulnerable to attempts to undermine them;
  • they usually create low paid jobs, and often jobs of a temporary nature; and
  • in the context of globalisation, these jobs are usually not of any strategic value to the domestic economy, that is, they are usually in sectors like services or mining, and do not help to promote a strong economy.

A healthy relationship between government, capital and labour can go some way towards alleviating the unemployment crisis of this country, but only if there is a clear strategy that links labour market reform, government trade, industry, fiscal and monetary policy, and the role of the state as entrepreneur.

In addition to this, we as socialists need to be absolutely clear that creation of jobs cannot be left to the market. It also cannot be simply a question of reforming the market.

Public sector

The only source of capital reserves great enough to make a significant dent in the unemployment statistics of our country, apart from what is in the hands of the largest capitalist enterprises, lies with the state. The public sector, which includes the parastatals, the public service and local government, already makes up almost 50% of the economy. The crisis of the public sector is well documented, but to argue that privatisation and contracting out are measures that will assist in solving this crisis is simply ridiculous. All this will lead to is reduced employment levels, and will thus add to the burden of the government in terms of job creation.

Measures to reform the public sector must include:

  • policy to reform the running state enterprises; and
  • policy to inform the transformation of the public service and local government administration.

State enterprises

Increasingly, the global debate about reforming these enterprises has shifted in favour of those who argue for privatisation. In the context of SA's challenges, these views are actually of little relevance, although the extent to which they inform our own policy discussions is clearly significant. From the position of a country which is undergoing a major period of reconstruction and attempting to ensure massive development, within the context of globalisation, it would seem obvious that the state needs, not less involvement in the economy, but more. All the "success" stories of growth in the post-World War II era - Germany, Japan, South Korea, Taiwan, etc. - have been characterised by massive state involvement in the economy. This has not been purely as a regulator, but also as a researcher, developer and entrepreneur.

In the South African context, with hostile capital both in the international and domestic sense, job creation cannot be left to the private sector. Even the involvement of the state in the economy as part of the "golden triangle" (government-business-labour) will not be enough. A major initiative needs to be undertaken to create various kinds of employment opportunities.

In the first instance, the spending on infrastructure - water, electricity, sewerage, roads - is clearly not going to create the desired levels of employment unless the state expands its role in this regard. This does not mean expelling the private sector, but unless the state sets up companies that will take charge of this process, development will be slow and job creation slower. Even at the level of housing delivery, it is clear that the state needs to intervene and create a state housing corporation to provide low cost mass housing. This can follow a number of models, among them delivery through local government. But the capacity needs to be developed to ensure that this can be done.

The essential point is to ensure that the state plays the role of entrepreneur where capital has failed. This was done by the apartheid regime to attempt to counter the ANC's strategy of isolation, with companies like Iscor and Mossgas. The apartheid state also used major public enterprises to drive development in general - Eskom and Telkom. Despite the shortcomings of some of these efforts, they did ensure that capacity was developed and that work was created for the NP's constituency.

We need to go beyond such a scenario, to one where the state begins to look for niches in the markets, both domestic and foreign, and takes advantage of these. A certain amount of venture capital could be put aside to develop industry in key areas - electronics, chemicals, transport, tourism, etc. These need not be run as state departments, but as business ventures which must perform according to the dictate of the market. Their edge will be created by the fact that management and workers in these industries will be driven by more than the profit motive and the desire for higher wages. Harnessing patriotism for the collective benefit of the country should not be scoffed at, as seems to be the fashion at present.

Public service and local government administration

As this area is extremely complex, a few general points will have to suffice. In the first instance, we need to ensure that moves to contract out are stopped. The problems of the public service - rigidity, its rule-driven character, excessive bureaucratisation, etc. - can all be dealt with in the framework of the public service. In fact, the solution to these problems lies in extending the definition of the public service to include local government administration, creating a simplified grading and salary structure, and moving to a performance orientated service with procedures for monitoring service delivery and ensuring that departments are given much more autonomy in the delivery of services to maximise efficiency.

If these measures are followed, public service can be improved, thus opening the way for the expansion of such services. Of course, the question of affordability does come into the picture, but the move to reduce the salary differential will deal with this if it is bravely and vigorously implemented.

Expanding the role of the state

The thrust of my intervention is to argue for expanding the role of the state. This runs counter to the general trend in the debates that seem to be determining the path in our own country. The essence of my argument is simple: capital is, by and large, unpatriotic. It has no desire or need to create employment. The government, by virtue of the ANC's majority, is in a prime position to utilise the state's resources to drive development and create meaningful employment. The state can act as an entrepreneur and ensure that investment opportunities are maximised and the public sector is expanded. If we are to succeed in creating employment then this must be central to the government's strategy.

The role of councillors

Progressive local government councillors are critical to the deepening of democracy in our country. The following paper was delivered by David Dlali at a workshop of newly-elected Western Cape ANC councillors.

First, to all comrades who are present, well done. But the battle has still a long way to go. Your election is a crucial moment in the history of our struggle against racism and poverty, not least here in the Western Cape. We need to translate joy into real action. There are many challenges ahead of us.

Let us reflect on your role as new councillors. Your role is to govern, to represent, and to take decisions. As councillors it is important to attend the council's monthly meetings. Not only because it is required by law, but it is the basis of your mandate to represent our people at all times. Attendance is not enough, active participation in decision-making and policy formulation within these councils is essential.

You must never forget that you represent an organisation which is committed to the total transformation of society and its organs of governance. That is your mission, and not the pursuit of material benefits for yourselves.

These councils are like a germ of a new life, and they should reflect the thinking of a new age. The onus is on you, comrades, as catalysts to transform these councils into people's organs of rule. The councils should not alienate people, but should be mirrors of hope and fountains of development for our communities.

There are other important things for us to remember. Councillors have no executive powers as individuals. You must always meet and decide issues collectively. You have to develop a pragmatic strategy in dealing with your opposition, without compromising progress and development.

Councillors also have an important role to play in the preparation of the budget, it reflects a council's future development proposals, and it indicates priorities. Many of us will be faced for the first time with the realities of a one-city budget. We need to assess the needs of our communities. The estimated amounts to be spent will have to rehabilitate the collapsed services of our previously marginalised communities. You will be under tremendous pressure, comrades, to provide a noticeable improvement in the quality of life of our people.

You will also need to establish and encourage a culture of payment through existing structures, like the Masakhane campaign. The likely outcome of failing to establish payment in the affected areas is that non-payment will spread further and to other levels of government, it will strip local councils of the ability to raise revenue, and you will not be able to function.

What is the role of councillors in committees and what is your relationship to your constituencies? Your's is not just a political role. You must never forget that councils are also economic agents which, in themselves (and not just as funders of private development agencies), have a vital role to play in the development of our areas. Let us use our majority muscle to benefit everybody, not just our supporters.

There are many new institutional demands at the local level. We need to restructure a variety of local government institutions - for instance, local government employer bodies; the Remunerations Board; the Training Boards and Training Centres. This kind of restructuring requires your active involvement.

You will also be faced with another new challenge, dealing with your counterparts in the trade union movement. You are now in a different position, as local government councillors you will be encountering public sector workers as employers. Your recruitment, training and wages policies will have a significant impact on the labour market. Here you must look at affirmative action, skills training and development, and even sponsoring education and development programmes within the community.

Local government is also an investor whose capital building, repair and maintenance programmes represent important business for the construction industry and allied trades. Here you must look at sub-contracting and tendering policies that promote historically disadvantaged communities.

Turning now to your relationship to your constituencies. It is true that people do not necessarily take a deep interest in what local government does, but this does not mean that people are apathetic or incapable of action. Our relationship with our constituencies should revolve around accountability, accessibility, and preparedness to be always available when needed. Since you cannot always meet all your people, it is important to form a committee in your constituency which can work side by side with ANC structures. A constant contact should be maintained with our organisational constitutional structures - ANC and SACP branches, COSATU and the civics.

But the relationship with your constituency must not end there. It should be polished and sharpened in your daily contact with council officials, some of whom may not always agree with you. But you must interact with them and be tolerant of their ideas.

To do all of this you have to remove the bureaucratic obstacles that stand in the way of delivery. You must not fool yourselves and believe that just because councillors take the final decisions within council that you occupy the real seat of power. Knowledge is power, and those of you who have served on transitional councils will know only too well how easily your decisions can be manipulated by the withholding or twisting of facts, and how your actions can be frustrated by complex and slow bureaucratic procedures. If you are to fulfil your role as community representatives, then you need to be empowered to make strategic interventions on behalf of those you represent. In short, you need to change the system, and you need to learn how to use it.

Some things you will need to establish immediately are:

  • who does what in the organisation?
  • where are the different places you go to for different sorts of information?
  • who are the different people you approach if you want to get different things done?
  • how are the agendas drawn up?
  • how do you get an item on the agenda?
  • when do the agendas close?

Comrades, you should not underestimate how vital it is for you to succeed.

Dictatorship of the Proletariat - a response to Jeremy Cronin

Xolani Mbundu disagrees with Jeremy Cronin's argument against the concept of the dictatorship of the proletariat which was published in the last issue of the AC. Mbundu is the chairperson of the Victoria Mxenge SACP Branch in Khayelitsha.

I welcome cde Cronin's bold and honest contribution to the debate about the abandonment by the SACP of the concept of the dictatorship of the proletariat (DOP) (AC, first quarter 1996). For the first time I, as a new recruit to the party, understand the reasons for the decision by the 7th congress to abandon the concept. Let me recap the reasons mentioned by cde Cronin. He says that among the reasons that led to the abandonment of the DOP was that the concept is associated with the terror that was committed in the Soviet Union during Stalin's years. Secondly, it was believed that the concept provides easy propaganda for the bourgeoisie, and its parties. Thirdly, there are "serious flaws" in the conception.

Cde Cronin provides a clear analysis of the Marxist classics, notably Marx, who, he argues, used the concept to refer to the transitional socialist state between capitalism and communism. He argues that for Lenin the concept was used to highlight that any revolution requires "vigilant defence" from both internal and external threat. He also argues that Lenin used the concept to argue that there is no "democracy in general". I will argue that cde Cronin seems to be creating differences between Marx and Lenin where none exist in their usage of the concept. I will argue that he tends to do away with the democratic content of the concept in favour of the "violent" content. I will then argue that the concept is one of the main tenets of Marxism-Leninism and that its abandonment means the abandonment of one of our class principles.

DOP - is it about law and order?

Cronin seems to be associating the concept of the DOP with violence and totalitarianism. He writes: "In our situation, a `dictatorship', however much one might insist that it is exercised in the name of the people or the proletariat, would simply organise all conservatives and or disgruntled forces into the hands of what is, at the moment, an active, conspiratorial but relatively marginal counter-revolution...Defence of the 1994 democratic breakthrough requires, not dictatorship, but a multi-pronged and well gradated set of policies." (pp.38-9)

He continues to say that the defence of the breakthrough is not "narrowly about law and order". He then quotes Lenin to prove his point that "dictatorship" is synonymous with violence. I get the impression that cde Cronin confuses a tactic with a strategy. For me, cde Joe Slovo's paper, "Negotiations: what room for compromise?", which paved the way for the present GNU, was advancing a tactical approach to the realities of the world and SA. It was never intended to shift away from the strategic objectives of the ANC and SACP - that of the national democratic revolution with a working class bias.

The fact that the bourgeoisie are on the offensive internationally may necessitate some tactical shifts, as we have done. But these tactical shifts must always be checked against the strategic objectives of the revolution. The bourgeois offensive does not mean that we must shy away from our class principles because we feel that their continued usage provides our class opponents with a propaganda weapon. For me, the DOP still has relevance in our struggle. It is relevant because it is not merely about physical force, it is about the working class ideological hegemony, that is, working class leadership of the NDR for an uninterrupted socialist transformation and ultimately the building of a communist society. A DOP in our country is about preserving and defending the working class bias of the RDP and making it a stepping stone for the building of socialism in our country. Use of the concept does not rule out a "multi-pronged and well gradated set of policy approaches."

Dialego (real name, John Hoffman) argues that the concept of the DOP denotes a form of "state which builds upon" rather than suppresses liberal political institutions. This dictatorship, he argues, must be characterised as a "post-liberal" form of state. He also argues that a socialist state is "only dictatorial in a rather technical sense" - it must dictate to those who threaten to destroy its intentions. (Dialego, SA Labour Bulletin, vol.15, no.7)

Hoffman also argues that "Marx's coercion is a coercion which is concentrated in the hands of the state, generalised in its scope and presented ideologically as a force for the common good". It is public and official, organised and "legitimate", and claims to act in the interests of society as a whole. He therefore argues that political coercion cannot be reduced to a mere physical force. (Hoffmann, The Gramscian challenge: coercion and consent in Marxist political theory, Oxford, 1984)

I noted above that cde Cronin tends to create a difference between Marx and Lenin on the DOP. My argument is that there is no difference between the two and that Lenin's elaboration was within Marx's initial conceptualisation. Let me refer to the Communist Manifestos where Marx and Engels say: "political power, properly so called, is merely the organised power of one class oppressing the other. If the proletariat during the contest with the bourgeoisie is compelled, by the force of circumstances, to organise itself as a class, if, by means of a revolution, it makes itself the ruling class, and, as such sweeps away by force the old conditions of production, then it will, along with its conditions, have swept away the conditions for the existence of class antagonisms and of classes generally, and will thereby have abolished its own supremacy as a class."

Parliamentary democracy - bourgeois?

Cde Cronin agrees with Lenin on the "abstraction" of democracy in general. But he asks if the ownership and control of economic life by the bourgeoisie makes parliamentary democracy synonymous with the dictatorship of the bourgeoisie. He argues that it does not, and therefore to say that parliamentary democracy is bourgeois democracy is a mechanical approach. What he regards as the most "important error" in this approach is the "assumption that the bourgeoisie has some natural and burning vocation to bring the gift of parliamentary democracy to us all." (p.43)

I disagree with cde Cronin's approach. Of course one is aware of the fact that there are many times that the state does have relative autonomy from the bourgeoisie's influence. But again, in our situation, the democratic movement has dominance in the government, but the state remains largely an apartheid state, a state that is supportive of the capitalist mode of production. The bourgeoisie still dictates in our country. We in the democratic movement would have loved that by now thousands of houses were already built. The bourgeoisie is dragging its feet. We would have loved that many more people were employed, but the bourgeoisie is retrenching. We always hear about the "decline" in the value of the rand, or "panic" in the market because the president is rumoured to be ill. All of these things happen because the bourgeoisie owns the means of production and uses this to manipulate political decisions and programmes.

Yes, it is the working class in alliance with other progressive forces, and not the bourgeoisie, that has always brought about parliamentary democracy. The bourgeoisie has conceded to democracy in our country as a result of struggle. It conceded because capital accumulation requires "stability", and so they conceded not because they have the interests of the working class at heart, but simply because they want a conducive climate for capital accumulation.

What leads Lenin and Marx to characterise parliamentary democracy as bourgeois democracy is its content. The means of production are in private hands and production is geared towards accumulating more profits with no social spending - except as handouts. For Lenin and Marx political power does not mean freedom. Let's remind ourselves what Lenin once said: "...the real business of the state goes on, not in the representative assembly, but in the state apparatuses, where the military, the police and civilian bureaucracies function as a more or less unitary body in the interests of the ruling class."

DOP and parliamentary democracy

For me, the DOP is not incompatible with parliamentary democracy. The working class needs representative institutions as another terrain of struggle to transform society to communism. What is important for communists is the transformation of these institutions from "talking shops" into "working bodies". The DOP is a combination of coercion, persuasion and consent. It requires politically conscious majority support. This is what gives it its democratic basis. Lenin once said: "The proletariat cannot achieve victory if it does not win the majority of the population to its side. But to limit that winning to polling a majority of votes in an election under the rule of the bourgeoisie, or make it the condition for it, is crass stupidity, or else sheer deception of the workers."

The DOP is a valuable concept in Marxist literature. It has a coercive and democratic content. It is one of the main tenets of Marxism-Leninism. Its abandonment means the abandonment of our class principles. Its use is more than relevant in our revolution. It gives focus and content to the ongoing struggle in our country. Let all of us, as communists, go out and explain the correct meaning of the concept to the doubtful revolutionaries.

Economic policy - the debate sharpens

In the last few months there have been many signs that the debate is heating up around the future direction of our economy. In the past weeks, both big business and the labour caucus at Nedlac have tabled major policy documents.

Both documents (Growth For All, and Social Equity and Job Creation)begin with roughly the same proposition: for the past two years we have been basking in the afterglow of the political miracle of April 1994, now is the time for some serious economic policy choices. Of course, having agreed on this, the two documents then radically part ways.

The sharp fall in the value of the Rand since mid-February may or may not be directly linked to this sharpening debate, but the fall has certainly been used as an opportunity to make all kinds of ideological pronouncements.

The reasons advanced for the fall in the Rand moved from uncertainty as to whether President Mandela would stay on until 1999 for his full-term. When this was clarified, speculation around our President's health was said to be the reason for the decline. Perhaps for the first time in world history, a president was sent to a clinic for several days not by medical professionals, but by the market. When the clinic clarified that our president was in perfectly good health, we were told that the Rand was declining because of rumours that Chris Liebenberg was about to resign as Finance Minister. (This proved to be one of the few correct rumours.)

When Trevor Manuel replaced Liebenberg, this then became the new reason for the decline in the Rand. Manuel, unlike Liebenberg, was from the ANC and, so the markets whispered, he was black. Then the Rand was supposed to be falling because of COSATU's threats of a stayaway, and finally "alarm" at the NP's impending departure from cabinet was said to be the reason for the Rand's fall.

All of these alleged "moods" and "concerns" of the market are being thrust down our throats in order to create a sense of panic and hopelessness. If the ANC-alliance blinks its eyes or shrugs its shoulders, we are told, we will send the Rand plummeting. All of this heightened ideological activity around the falling Rand is designed to deliver us into the agenda of big capital.

But what is that agenda?

Soon after the April elections in 1994, the major captains of industry in SA constituted themselves into a think-tank - the so-called "Brenthurst Group" (Brenthurst is the name of the residence of the group's host, Harry Oppenheimer). The Brenthurst Group was deeply concerned that progressive forces had an "undue influence" over government economic policy. They were critical of the NP's inability to have any substantial impact. And they were also relatively unhappy with the performance of Business SA in Nedlac. BSA included too broad a spectrum of business interests, in their view.

These concerns resulted, in the second half of 1995, in the relaunching of the old sanctions-busting SA Foundation. The SA Foundation now has a completely new character, it now represents the 53 largest corporations in SA. It also has a fresh mandate, largely focused on impacting on domestic economic policy. In February, SA Foundation launched its first major public intervention, the document called Growth For All. The main features of this document are analysed elsewhere in this issue (see the article by Vella Pillay).

What the Growth For All document represents, in essence, is the first elaborate and sustained ideological challenge to the RDP. The SA Foundation ideologues were convinced that the ANC in government was fumbling for an macro-economic policy and so they were somewhat taken aback at the less than entirely enthusiastic response their document got from the leadership of the ANC.

Deputy president Thabo Mbeki is reported to have said that, while the document was full of advice as to what everyone else should do, it was singularly lacking in any suggestions as to what the captains of industry intend doing to overcome SA's economic and social crisis.

Minister of Labour, Tito Mboweni was even more forthright and public in his criticisms. Quite correctly, he saw in the document a radical and sustained attack on all of the progressive reforms that the Labour Ministry has so carefully and successfully piloted through Nedlac. Instead of bringing more and more sectors of labour within the scope of civilised labour relations provisions, the SA Foundation document seeks to broaden the numbers of rightless workers.

For its part, COSATU has said that it will not negotiate with business at Nedlac if the SA Foundation document is on the table. "The document must be removed from the table first", COSATU general secretary, Sam Shilowa insists. "Only then will we negotiate at Nedlac".

We agree that the SA Foundation document should be taken off the table, but we urge comrades to read the document nonetheless. Because here in plain text is the agenda of the captains of industry.

The document is the application of neo-liberalism to the South African context, and its major targets are the new democratic government and the progressive trade union movement. It argues for the radical reduction of government's role in the economy. It seeks to confine government to a largely law and order role - keeping the country safe for investors. As for the trade unions, the document is quite forthright, one of the main problems in SA, it says, is that "trade unions are too strong".

In the coming months the struggle around the economic future of our country will certainly intensify. From the side of the ANC-led alliance, the task is not to invent a whole new set of policies. We need, rather, to defend and advance the RDP mandate of our government. We need, also, to once more anchor economic issues amongst the majority of our people. If the pressures on economic policy-making are confined to those who are most articulate, to those who own and control much of the media, then we will always be at the mercy of market "sentiments" and "concerns". The great majority of our people couldn't give a hoot if Trevor Manuel is black or white. They want to see delivery, and policies that make delivery possible. The great majority of our people don't get into a panic because COSATU is calling for a stayaway or because the NP is leaving the cabinet.

We need to ensure that it is the feelings, concerns and fears of the great majority of working people in our country that impact on economic policy-making - and not the privileged prejudices of the yuppies on the Johannesburg Stock Exchange.

The real gravy train

Ever since the April 1994 elections, the ANC-led alliance has been treated to endless lectures from the private sector about "fiscal discipline", about "belt tightening", and about how the public sector is inherently more wasteful than the private sector.

All of these lectures are very interesting. But what are those who are giving us these lectures doing themselves?

Consider the salaries the executive directors of Murray and Roberts recently awarded themselves. They now each earn salaries averaging R2,04-million per year, which works out to R170,000 a month. Of course, they have not exactly told us this, most companies in the private sector refuse point-blank to disclose the salaries of their top executive. These figures are based on the total earnings of executive directors at Murray and Roberts and then divided by the number of such directors, as published in the company's annual reports. It probably excludes additional benefits and perks.

Even more astounding is the fact that the very prophets of the market are the ones who happily flout the market's verdict. We are constantly told that the market is the best indicator of performance, and that market-related performance should determine reward.

If that's the case how do you explain the most recent salary increases for executive directors in Murray and Roberts was 50%, but profit growth was only half of that at 25%?

Dorbyl executive directors did even better. Salary increases for Dorbyl directors rose 201%, while profits were down 25%. While at Anglo's AECI the salary increase for executives was 122%, while profits were down 8%.

Land and agrarian questions in SA - A socialist perspective

Richard Levin argues that land and agrarian struggles are a largely neglected area within our movement. It is essential for a party like the SACP to engage much more actively and strategically with these struggles.

Land is a key agrarian question in SA. For the majority of oppressed rural blacks the transformation of agrarian relations is tied to the opening up of access to land. Agrarian questions relate to the form taken by the development of capitalism in agriculture. They are also political questions, involving an analysis of which rural social classes are most likely to be the allies of democratic revolutionary political parties.

This article discusses four agrarian questions:

  • the land question and agrarian reform
  • forms of production and social differentiation
  • food production and the division between town and country, agriculture and industry
  • democracy and alliances in agrarian struggles (endnote 1)

Land and agrarian reform

Land dispossession has been central to the development of the state, economy, politics and social classes in SA. In the process of land dispossession rural livelihoods have been destroyed. Land was central to the cultural and economic survival of indigenous African people. This is why land must not only be understood in terms of its productive and market value. Land availability may be meaningless without the means of production required to produce on that land. Those who agitate actively for land are often those who already have access to productive resources to cultivate land.

While land reform is in the interests of all rural black people in SA, allotment holding wage workers, agricultural labourers and marginalised women will struggle to engage with the market as individuals. They may only benefit if organised co-operatively. Land reform on its own cannot transform capitalism. Private property rights are bourgeois demands with a variety of potential beneficiaries. Land reform, like most bourgeois reforms, may enhance capitalist growth, while simultaneously transforming class relations and stimulating class formation and differentiation.

Class, gender and land

Social relations in the countryside involve social class, gender, race and political power relations in white farming areas and villages of the bantustans. The formation of social classes in white farming areas is relatively straightforward. They evolved when black people were dispossessed of their land and forced to become share-croppers and labour tenants.

With the development of capitalist agriculture, share-cropping largely disappeared, while state intervention from above, during the apartheid era, sought to eliminate labour tenancy. This semi-feudal exploitative relation was not, however, completely eliminated and it persists to the present in various parts of Mpumalanga, the Northern Province, North West and KwaZulu-Natal. In parts of the Free State and Eastern Cape many farmworkers still own small herds and enjoy grazing rights and comprise the remnants of a labour tenant class. Understanding the different demands of farm workers and labour tenants will be important for advancing particular land reform programmes. While working and living conditions (including security of tenure on residential land) are often the priority for many farm workers, for labour tenants the key demands generally hinge on agricultural and pastoral land rights.

The formation of social classes in the old bantustans was a more complex process, involving more people. Indirect rule through the creation of bantustan regimes contributed to the formation of incipient bourgeois class forces, while national democratic transformation has hastened the process of bourgeois class formation in these areas. Social differentiation in the former bantustan areas has also been generated by agricultural and non-agricultural forms of petty commodity production. Petty commodity production involves two forms of exploitation (endnote 2). The first arises out of market forces which lead richer households to enter unequal relations from a position of comparative advantage. Exploitation in this context is produced by unequal relations where the rich exploit the poor. Exploitation is also a product of forces imposed directly from above. In this case, political power is used to facilitate accumulation. In SA, differentiation is a product of both forms of exploitation.

The concept of petty commodity production helps to explain the instability of peasant society and economy, as well as the numerous forms of production which contribute to the survival of rural people. Agricultural petty commodity production (or peasant production) is an unstable form of production because it is highly vulnerable to competition. This instability helps us to understand the fragility of rural livelihoods in SA. Any solution to agrarian questions in a new democratic dispensation involving land reform and the restructuring of the market will create spaces for petty commodity production and lead to processes of class transformation and differentiation. An investigation of the nature of social differentiation in the bantustans is important in order to give a class content to the political practices being established through post-apartheid reconstruction.

To understand class it is necessary to examine various social relations including labour exploitation, access to and ownership of land and grazing rights, and ownership of other means of production - including agricultural capital assets and irrigation equipment. In the South African context, wages are another crucial determinant of rural social differentiation. Ruth First, writing on the peasantry of southern Mozambique, showed how wages played a key differentiating role among the peasantry (endnote 3). According to her analysis, poor peasants depended on wages for the purchase of the means of subsistence, whereas middle peasants depended on wages for agricultural production inputs. Thus migration in southern Africa has taken place for distinct reasons for different social classes in the countryside.

It is possible to identify several broad socio-economic classes, understood in terms of social relations. At the same time, social stratum exist within class categories and there is class mobility from one category to another.

This gives us the following broad categories:

  1. the petty bourgeoisie, consisting of professional, salaried individuals such as lawyers, bureaucrats, extension officers, etc.
  2. petty capitalists, who achieve subsistence and attempt to accumulate through various petty commodity activities. They have access to productive assets and/or agricultural land and they hire wage labour for productive activities. This category includes, for example, small farmers, brick-makers, taxi-owners, and shop-keepers.
  3. worker peasants , consisting of wage workers, current or historical, who also have access to productive assets and agricultural land. Wages contribute to agricultural and/or non-agricultural forms of petty commodity production. They may hire wage labour periodically, but they rely mainly on self-employment.
  4. allotment-holding wage workers, consisting of people with access to residential land and a small plot. They are primarily dependent on wage labour and pensions for survival, but also engage in agriculture on small allotments and other forms of petty commodity production. Labour tenants are a sub-set of this class.
  5. the rural proletariat, consisting of landless or near landless people, who also have some access to off-farm wage income. This class is stratified internally in terms of access to the labour market. It includes farm workers, permanent and seasonal. Because of the limited access to land, agriculture is constrained (endnote 4).

It is important to emphasise that these classes are understood as being flexible relational categories, which are internally stratified. Moreover, these classes refer to the position which people occupy within the social structure of production, and not to how they see themselves. They can only become classes in the true sense when organised through political practice. National liberation political practice and discourse has historically not organised rural people into classes. It has engaged with them, by and large, as an oppressed mass.

Gender relations and social differentiation

Gender relations should not be confined to the relationship of women to capital. Gender relations also involve the relationship of women to capital, household relations, and state/female relations. The development of capitalism has led to the renegotiation of economic relations between individuals, especially between men and women, at the level of the household and within the broader labour processes. Rural women are not homogeneous, there are significant economic and other differences between them.

Capitalism and racial oppression destroyed the capacity of rural households to produce the means of subsistence. Wage employment provided some relief, but has largely been undertaken by males through a process of labour migration. Women were largely left out or restricted to less lucrative seasonal or domestic employment in the countryside. This changed patriarchy and contributed to social differentiation through unequal access to wages which generated gender struggles within the household.

Many males opposed their wives' involvement in income generating activity. Similarly, struggles over the wages of migrants arose as women accused their men of wasting money on beer, tobacco and women. Many women do not even know how much their husbands earn. Some women do not have access to or control over any money, and many with access to cash are involved in trading or petty commodity production rather than receiving remittances from absentee husbands. A significant proportion of allotment holding wage worker and rural proletarian households are headed by women. Many of these women have been compelled to join the rising number of casually and seasonally employed rural women wage workers on surrounding white farms or on large-scale bantustan state and parastatal plantations.

Within the bantustans, women have little or no control over the production process, since they lack the ownership of the necessary resources for production, including the means of production (land and implements) and control over labour power. The ownership of assets is an important source of power and authority in the rural household, and this is one reason why men are able to exercise control over decision making and the lives of females.

Labour power is another important dimension of gender relations in the rural household. Women and children's labour power is commanded and controlled by male heads. At the same time, women's work tends to be undervalued, because much of it is reproductive work. Food is often produced by women. Nevertheless, there are limiting factors over women's command over food production. One of these is their lack of ownership rights over land and implements, which deprives them of the right to make decisions over crucial inputs for production. One of these is their lack of ownership rights over land and implements, which deprives them of the right to make decisions over crucial inputs for production. Women who have no land are possibly more vulnerable to hunger and famine, compared with their male counterparts who might secure food through other avenues such as wage labour. Women are in charge of food distribution in the household, although they still remain susceptible to hunger and malnutrition, because the male head of the household is served first. This practice is widespread throughout the Third World, with evidence that among certain social classes there are higher levels of under-nutrition among women and girls than among men and boys within households.

The patriarchal character of the chieftaincy, and its control over land, is central to discussions of gender relations under conditions of national democratic transformation. Customary land rights help to explain women's oppression in the South African countryside. Problems of landlessness generated by colonial and apartheid dispossession has meant that women are particularly hard hit. While in the bantustans, as elsewhere in Africa, women were able to derive strategies at a local level to secure tenuous access to land, this is no solution to the problem. Under conditions of national democratic transformation, opportunities exist for a restructuring of land tenure systems which will be free from gender discrimination.

Town and country, food and the division between industry and agriculture

In order to increase profits, capitalists may increase the rate of exploitation of their workers by increasing the length of the working day - by making their workers work harder, or by reducing wages. The reduction of wages can only take place if the value of the necessities of life, primarily food, decrease. Cheap food is an important mechanism for increasing profits by allowing for a reduction in wages. But if the price of food goes up, and wages remain constant, as in many African countries under IMF Structural Adjustment Programmes, this can lead to riots.

In the name of both capitalism and socialism, many have argued that cheap food is a necessary requirement of industrialisation. This issue was central to the industrialisation debates in the Soviet Union in the 1920s and 1930s. The argument for cheap food provided the rationale for forced collectivisation in the Soviet Union. The debates took the form of pro- and anti-peasant arguments. The same arguments have resurfaced in discussions on Third World industrialisation. Some argue that there is antagonism between the peasantry as a whole (producers of food), and the working class (who are consumers of food). Peasants want to sell food at high prices, while workers want cheap food. This, it is argued, undermines alliances between the working class and the peasantry.

Policies based on this kind of reasoning have generally led to rural poverty which inhibits the growth of an internal market required by a growing manufacturing industrial sector. Cheap food policies hurt poorer social classes of peasants and agricultural workers most. This is because farmers will cushion their profits by reducing wages, while poor peasant households will have to intensify the exploitation of their wives and children in order to compensate for lower food prices.

In SA, colonial and apartheid agrarian development has led to a virtual self-sufficiency in food production of major foods (endnote 5). But most food is produced on the approximately 55,000 white-owned farms, whose development has been supported by massive state subsidies and support systems. Within the former bantustan territories, on the other hand, colonialism and apartheid generated a dependence on food purchase by the majority of people whose own food production was whittled away by land dispossession and oppression. During the 1980s, the apartheid regime reduced subsidies and support mechanisms for white agriculture through trade liberalisation and deregulation. This brought sections of capital into conflict with organised white agriculture. This intra-white struggle over white agriculture brought little benefit to poorer black consumers. In fact, it brought higher food prices as consumer subsidies were reduced and then abolished in 1991.

The apartheid regime and organised agriculture undertook specific measures during the 1990-4 transitional period which guaranteed the future prominence of white agriculture, primarily through the massive drought relief programme of R3.4 billion. This prevented foreclosure and abandonment of white farms, while maintaining land market prices. Collectively, these measures have undermined the scope of a land reform programme. At the same time, food prices spiralled upward and the regime's abolition of the bread price subsidy was followed by the attempt to impose VAT on basic foods, a measure partially defeated by the COSATU-spearheaded campaign of 1992. For the first time the regime allocated some funding to drought relief measures in the bantustans, although its belated and limited action was largely ineffective.

The Government of National Unity has continued the liberalisation and deregulation of agriculture through the NP-controlled Department of Agriculture [this was written before the recent announcement of the NP pull-out from the GNU, and the appointment of the ANC's Derek Hanekom as both Land and Agriculture Minister -ed.]. Maize marketing has been partially deregulated (in May 1995), ending the historic monopoly of the Maize Board, while the maize milling industry has argued that without government intervention, the consumer price of maize meal may rise by 40% over the year. Food price formation is complex and involves farmers as well as other economic agents who handle the crop on its way from the field to the consumer. SA's food economy is characterised by a high level of monopoly throughout the food chain, with the potential to exercise market control and set prices.

Those most vulnerable to food insecurity are often various classes of the rural poor. Some argue that food insecurity stems mainly from a lack of purchasing power. This implies that food security must be secured through employment. This may be true to some extent, but the role of land reform in generating food security should not be dismissed. Some people present themselves as advocates of better diets and food security for the urban poor, when in fact their real agenda is to protect existing white commercial farming and undermine serious land and agrarian reform. This agenda is linked to arguments that black people are unable (or unwilling) to become commercial farmers, or that only the wealthier, "more viable" segments of black farming are worthy of support.

What needs to be borne in mind is that the urban poor are frequently rurally connected. They may be retrenched farm workers, who in the face of landlessness live in squatter settlements of urban areas. They may be migrant workers with ongoing rural connections. While I do not suggest that all of the urban poor have land demands, it is likely that the food security of many could be met through land reform which recognises that poor urban and rural social classes pursue multiple livelihood strategies in which food production for consumption could play an important role. Alternative production systems, such as co-operatives, with the necessary support mechanisms and market access, could raise productivity allowing for lower urban food prices. They could also expand the internal market for industry and lead to a more balanced development between rural and urban areas.

Democracy and alliances in agrarian struggles

If the transition in SA is ultimately guided by a new bourgeois alliance, then the prospects for meaningful land agrarian reform are remote. On the other hand, if national democratic reconstruction becomes a genuinely "people-driven" process, then socialism can be placed on the agenda. National democratic transformation led by the popular masses provides the minimum condition for a socialist advance.

Despite the central role of forced removals and land dispossession in our history, land has often been neglected by the national liberation movement. This partly results from conceptions of development in SA in which the role of industrialisation and the creation of a working class has been given the major priority. Capitalist development has been equated with industrialisation, urbanisation and proletarianisation.

In the 1980s the United Democratic Front and the MDM were unable to raise the level of rural organisation to constitute a revolutionary challenge to the bantustan system. At the same time, the trade union movement under the aegis of COSATU was unable to make a serious impact on the organisation of farm workers. This meant that the national liberation struggle was driven mainly by urban based struggles. In the rural areas, residents' associations and youth congresses became the major vehicles of organisation and resistance. Resistance to chiefs in some areas was not linked with the land question and the legal hold which the "tribal authority" exerted over land allocation.

After the ANC was unbanned a National Land Commission was established. It began to draft policy through the establishment of Regional Land Commissions. They were responsible for policy work through the 1991 National Conference in Durban to the National Policy Conference held in Johannesburg in 1992. After this policy conference, however, the National Land Commission began to disintegrate. It was brought under the ANC's Department of Economic Planning as the Land and Agriculture Desk. Steps were taken in late 1993 to revive the commission with its regional structures, but by then links with local level structures had weakened. Nevertheless, a progressive, albeit contradictory policy guideline was developed, and the RDP sets out a programme of land reform based largely on these principles.

The entrenchment of private property rights in the Interim Constitution threatened to maintain the status quo in land ownership. A large demonstration of rural people outside the World Trade Centre in September 1993 warned all negotiating parties not to ignore the land demands of rural people. These demands were echoed by the NGO sector through the National Land Committee (NLC) at the Community Land Conference in Bloemfontein in February 1993. The conference also discussed the possibility of forming a rural social movement.

This is consistent with the RDP's commitment to a people driven process, but there are obstacles to the realisation of this in practice. One is that most of the ANC leadership has moved into parliament together with some of the most skilled trade unionists and NGO workers. This has led to a leadership vacuum within civil society which undermines prospects for the evolution of a successful popular participatory development strategy. It has also opened up sources of antagonism between leadership and rank and file.

These contradictions surfaced at the NLC's Community Land Conference of February 1994, which saw civil society sending a clear message to the ANC that it was devoting insufficient attention to rural issues. A significant resolution emerging from the conference was the restitution of land at no cost to communities who had fallen victim to forced removals. A major strategic and policy problem faced by the ANC since its unbanning has been to establish a mechanism for acquiring land, while simultaneously acknowledging that the denial of bourgeois property rights to blacks was central to colonial and apartheid forms of oppression. This contradiction has posed a dilemma around property rights for the movement, and it has created tensions between an emerging petty bourgeois leadership and its mass base.

Strategic tasks: a socialist perspective

The central task of a socialist party is to identify which social classes and categories in the rural areas will support a socialist advance beyond (bourgeois) national democracy in tackling agrarian questions. During national democratic transformation new class forces will assert themselves, and class alliances formed through the tripartite alliance will be central in determining the form of our bourgeois democracy in the post-apartheid era.

In the countryside, black classes who have been historically denied opportunities for accumulation will now have them. In cases this will lead to extra-economic coercion, often through the local state and/or the institution of the chieftaincy. This trend was established under the system of "indirect rule" imposed by the apartheid state where forced labour, forced contributions and forced removals were imposed by apartheid's indirect rulers on the mass of the rural population. Through the negotiations process and electoral alliances, chiefs will resuscitate power and influence lost at the end of apartheid. Under these conditions, extra-economic coercion and gender oppression will thrive. While a socialist perspective cannot be imposed from above on rural people, they should be supported were they have whittled away the chieftainship through their own struggles.

A major obstacle to state delivery of land and agrarian reform is the separation of the Land and Agriculture ministries, under ANC and NP leadership respectively [written before their recent amalgamation under a single Minister -ed.]. A real danger is that mechanisms designed in the Land Ministry will deliver land without the necessary agricultural support services to sustain development on the land. To some extent, the Directorate of Settlement Support within the Land Ministry is designed to deal with this problem, but this needs to be coordinated closely with the Agricultural Ministry's Broadening of Access to Agriculture Thrust (BATAT) programme for small farmers. This programme runs the risk of "adding on" petty capitalist black farmers to a largely intact core of white farmers with a monopoly control of agricultural productive and marketing activities. While black farming in all its forms must be supported, there needs to be an alternative capable of eroding the monopoly power which white farmers exert over agriculture.

Discussions of the monopoly power of white farming become academic in the absence of a genuine popular alternative to the current status quo, and support for "emerging black farmers" *on its own does not constitute an alternative. Such an alternative should be built on an alliance between different segments of the rural proletariat on white farms and in former bantustans. It must also involve the development of a vision of alternative systems of production based on forms of cooperation.

Legislation enacted by the Minister of Land Affairs does open up the space for democratic advance, but again this will require organisation on the ground to realise this. The Restitution of Land Rights Act provides opportunities for people to access land through non-market means. The other leg of land reform, land redistribution, largely under World Bank influence, will take place through the market. Market mechanisms are largely rejected by the people on the ground who have experienced land dispossession. A spread of the land market is likely to increase the vulnerability of poor and marginalised rural social classes and benefit emergent petty capitalists and worker peasants. Market land reform, as seen in Zimbabwe, will take a long time and will not deliver substantial land to many people.

It is, therefore, important to devise mechanisms within civil society to ensure people file viable land claims to the Land Claims Commission. National democratic transformation has converted political activists into professional politicians whose work-loads often render them unable to work with communities on the ground as they did in the past. A culture of political activism needs to be rekindled and organised formations like the SACP have a central role to play in this.

"Capacity building", "empowerment" and "participation" have all become buzzwords of mainstream development in SA, but they often conceal top-down forms of policy formulation, planning and project implementation. The World Bank and other agencies of international and national capital have successfully used the language of participation to legitimise their position of market-led reform. The SACP must build organisational structures on the ground in rural areas to input into the development forums created during the transitional phase and by provincial governments. Input should be based on a clear political agenda of development, combined with local knowledge and perspectives of the most exploited on development.

If organisation is systematic and sustainable, then new land reform legislation can be tested to its limits, and if need be amended to deal with demand. The Land Ministry has presented a vision of demand-driven land reform. The problem with this conception is that it ignores the necessity of people's needs being converted into demands, a process which requires organisation. A key role for the SACP is to organise campaigns to develop alliances between groupings of the most exploited and oppressed rural strata. Common demands need to be identified and, where possible, linked to urban working class demands.

Land redistribution through the market as envisaged by the Department of Land Affairs will allow, through grants and subsidies, poor social classes to access land. This will enhance their food security, and help combat poverty. But it also creates the potential for a pooling of subsidies and for groups of people to access large areas of land if they can develop cooperative strategies of farming. This could lay the basis for alternative production systems. To succeed, however, this requires the development of capacity, organisation and the inculcation of socialist values. The organisational challenges posed by these are enormous, but they are essential tasks for a socialist party.

Notes

  1. This article draws extensively on earlier work conducted with both Michael Neocosmos and Daniel Weiner.
  2. This argument draws heavily on the work of Mahmood Mamdani, "Extreme but not exceptional: towards an analysis of the agrarian question in Uganda", Journal of Peasant Studies, 14 (2), 1987.
  3. Ruth First, Black Gold: the Mozambican miner, proletariat and peasant, Harvester, 1987.
  4. See Richard Levin, Ray Russon and Daniel Weiner, "Social Differentiation in SA's bantustans", in Levin and Weiner (eds.), Community Perspectives on Land and Agrarian Reform in SA, Chicago, 1994.
  5. This section of my argument draws extensively on Henry Bernstein, "Land and food in SA's agrarian question", in Levin and Weiner (eds.), No More Tears...Land Struggles in Mpumalanga, SA, Trenton, Africa World Press (forthcoming).

Approaches to a strategy for job creation

Vella Pillay argues that if we are to create jobs and generally transform our economy we must reverse the trend towards minimising the role of government in the economy. Pillay is a member of the board of the National Institute of Economic Policy (NIEP).

South Africa's unemployment is now structural in the sense that it has become a long-term problem. Among those unemployed, almost 60% have been without a job for more than one year, while an additional 18% have been unemployed for between six months and one year. This implies that more than one third of our working population finds itself in this category of structural unemployment. Something approaching another one third is perhaps unemployed due to short-term cyclical factors. The incidence of unemployment falls heavily and excessively on our African population. Unemployment is also primarily a problem of the young, some 55% of unemployed Africans are less than 30 years of age.

Formal non-farm employment rose by 1% in 1995, creating around 50,000 new jobs. On the other hand the number of new entrants into the job market grew by some 380,000. Between the start of the current recovery in mid-1993 and the first quarter of 1995 52,000 new jobs were created. This has to be compared with the loss of 429,000 jobs in the recession between 1989 and 1993. Employment in the mining industry has plunged by some 140,000 to 333,000 in the last five years, with a loss of 58,000 in 1995 alone.

Projections of the future level of employment to the year 2005, based on a model relating employment to output growth, and taking into account the natural increase in the size of the labour force, are not encouraging. If we assume unchanged economic policies, such projections suggest that output growth would have to reach almost 8% per annum to achieve a constant level of unemployment with a 3,89% annual growth of the labour force. With these projections, there is also unlikely to be any reduction in the skewness of income distribution between the African and non-African labour force. In other words, these numbers suggest that if employment is to grow by more than the natural increase in our population (and if the present inequality in income distribution is to be progressively reduced) major changes in macro-economic, social, trade and industrial policies need to be made.

In the meantime, a new study by researchers at the University of Cape Town shows that more than half of all South Africans - 95% of them black - fell below the poverty line of less than R301 a month.

The immediate outlook for employment remains bleak, despite the output growth of around 3% in 1995-6. Tens of thousands of provincial and central government employees face retrenchment as the state struggles with its arbitrary and self-imposed budgetary constraints. Tens of thousands of textile jobs are likely to be lost as a result of the tariff reductions. To this may be added the considerable job losses entailed in the projected plans for the privatisation of public assets. NALEDI (the COSATU-aligned research NGO) has estimated that already some 130,000 jobs were lost at Eskom and Transnet in 1993-4.

Approaches to employment policy

In the recent period we have had two programmatic processes on economic policy critically concerned with the unemployment problem. The first is the drafting of a major project to take the RDP forward by government departments through an initiative by Deputy President, Thabo Mbeki. The second is the so-called "Growth for All" economic strategy of the South African Foundation. The third horse of the Nedlac troika - the trade union movement - is [at the time of writing this paper -ed.] in the process of formulating its approach to the unemployment problem.

Here I wish to indicate briefly my view on the first two initiatives, before suggesting my own thinking on unemployment.

The National Growth and Development Strategy (NGDS) of Government

The NGDS has not yet been made public as a formal document. It would, therefore, be unfair to comment in any detail on existing drafts. However, it is most important that a broad debate does occur, and that this debate does not wait while a governmental drafting process takes its own course. This is particularly the case as I have the impression that, while there will be strong rhetoric on the need for employment generation, there will be considerable vagueness about policy instruments. There is a real danger that we will end up relying on market forces to resolve our problems. As things stand, there seems to be little recognition of the uniqueness of the South African unemployment crisis, and hence of the need for a very much more original approach to its solution.

My impression is that the immediate measures for growth and hence employment that are going to be advanced are the coordination of exchange rate and tariff policies and the elimination of exchange controls. This would be part of a programme of evolving competitive niches in export markets, the build up of tourism, and greater involvement in the SADC area. Employment will be seen as conditional on opening up the economy to international competition, which in turn will be the major influence over the country's industrial policies, and this is what will be called the restructuring of industries.

We are likely to be told about the so-called informalisation of sectors of industry, leading to a reduction of wage levels and costs. To this will be added a public investment programme. At the heart of this kind of programme there will be five sectors which will drive the employment creation of the future: manufacturing for exports and domestic needs, land and a largely undefined agricultural reform, tourism, construction and engineering, and the financial and administrative sector. If I am not mistaken, macro-economic policy will remain conservative as at present, with heavy reliance on the impact of the removal of exchange controls, the reduction of tariffs, and other deregulatory measures. There is an expectation of major inflows of foreign capital, which will foster a significant export sector and be the saving grace for the South African economy in the next millennium.

The "Growth for All" strategy of the SA Foundation

The SA Foundation document is unashamedly right-wing in the sense that it seeks to recreate, albeit under different auspices, the dual economy of the past. The first of these economies would be a contemporary version of that which is dominated by the conglomerates, grounded in the high standards of the white population, open to the outside world, focusing on exports and not encumbered with regulations relating to exchange controls, import tariffs, high taxes, or other government intervention in the economy. For this economy the state would privatise all public enterprises, stretching from the sale of the large Industrial Development Corporation holdings in Iscor, Sasol and Alusaf. The selling off of the more complex enterprises, like Transnet and Telkom will then follow, and then parts of Eskom, and finally the government pension funds. All this will be buttressed by what is called a flexible labour market - a market of free entry within a two tier wage structure.

It is this second tier which revives, in a different guise, the dual second half to the first economy. This second tier would be designed to serve the revival of the old cheap labour system of the apartheid era - a system which denies minimum wage regulations, and which maintains the barest labour standards. One assumes that this labour tier will, in time, come to define the employment system in the mines, and in many other labour intensive industries.

This is not an anti-poverty strategy, rather it will provoke a fierce competition for jobs by workers in each of the two tiers, and between the two tiers. This will force down the average wage rate in the country as a whole.

As for government policy, this document calls for "sound" policies of low inflation, slashing the fiscal deficit, tight control over the money supply, positive real interest, the reform of the tax system, comprehensive deregulation of the economy, full liberalisation of the financial sector, and the orientation of industrial development to the outside world, that is, to exports.

The role of the nation state

It is quite evident that at the centre of these two approaches - of government and the SA Foundation - is the question of the role of the state in the economy. What I believe is the emerging government approach is equivocal, largely confining itself to what are called supply-side measures and investment in people as a facilitating role in the economy. The SA Foundation, by contrast, is less equivocal, it calls for the absolute reduction of the role of the state in the economy.

In my view, and basing myself not only on international experience, but the internal logic of an economic policy for growth and development, there has to be a fundamental unity and a mutual interdependence between the monetary, fiscal, industrial, trade, labour market and infrastructural policies. That unity and interdependence constitute what we generally call macro-economic policy.

This suggests that the macro-economic cannot exist without a clear conception of the role of the nation state. Whether economic policy makes the state loom large as a major actor in the economic area, or reduces its role to one of behind-the-scenes activity, there is an underlying theory and indeed a practice about the way in which the state and civil society are formed and interact. Sadly, in our country today, there is an observable tendency to brush aside this implicit conception of the state. Yet, in my judgement, that conception remains crucial, because it informs and affects the way in which macro-economic processes themselves are viewed and managed. This tendency to neglect this whole question manifests itself in the steady retreats of the state - the virtual abandonment of interventionist economic policies to overcome market induced failures, cutting back the public sector through privatisation measures, the concentration of government efforts on restricting and reducing the fiscal deficit at a time when unemployment has reached unprecedented heights, and deregulating critical areas of macro-economic management, such as exchange controls.

But there do exist viable alternatives to the present range of economic policies. What such alternatives require is a new courage and determination in our governing institutions not to be intimidated by the threats of a collapse in investor confidence and other similar pressures from the old establishment and the international financial institutions. The options which immediately suggest themselves are:

The key focus of policy should be directed towards mobilising and putting into productive employment our country's most important resource - namely our people. This implies policies which generate, through rising domestic employment, an ever widening domestic market, with this market becoming the mainstay of the economy and the launch-pad for a competitive structure of foreign trade relations. Our present policies are precisely the reverse of this approach, and hence the feeble state of the economy's growth.

We should demystify all those policy injunctions which seek to divert the country's macro-economic policy from redressing inequality and which reduce the reconstruction and development programme into an empty mantra. This means that arbitrary limits to the fiscal deficit should be abandoned and fiscal policy should be structured around target levels of employment generation. Today, a feasible fiscal deficit as a ratio of GDP is around 7-8%, and not the 5,3% being presently sought by the government. The funding of such a deficit can be easily managed by the restitution of the policy of requiring, by law, all the savings institutions to hold one-half of their assets in government bonds (the so-called "prescribed assets" system").

A further necessary process of demystification concerns monetary policy - the practice of enforcing arbitrary rules on money supply and credit and the punitive level of interest rates in the name of "fighting" inflation. The reduction of the effective rate of interest to around 5% will save the government many hundreds of millions of rand in the cost of servicing the national debt. Further, such a rate will allow small and medium-sized firms to flourish and expand employment opportunities.

The protection of the largely infant sectors of our economy through an active tariff policy against foreign competition should be enhanced instead of the present trend which has already begun to decimate our manufacturing sector, the textile and clothing industries in particular.

The further relaxation of exchange controls, especially on the capital account, should be abandoned. The alternative would be a scale of capital flight that could bankrupt our economy.

All of the above, finally, require a reversal of the present rolling back of the state in the management of the economy. This means halting the current programme for the privatisation of public assets and the construction of a purposeful macro-economic policy which brings together, in a consistent whole, all the instruments of economic policy - fiscal, monetary, trade and tariffs, labour market, transport, the social and economic infrastructure, industrial policy and much else - in the pursuit of clearly defined objectives. The most important of these must be the creation of jobs and the reduction of poverty.

Documents

RDP COUNCIL

Rebuilding the Mass Democratic Movement for a people-driven RDP

This paper was written by the RDP National Council's Working Group, as a discussion document for the RDP Council National Workshop, 9-10 March 1996. It seeks to stimulate debate around issues identified by the participating formations within the RDP Council, and by a series of debates that have happened in the provinces.

1. INTRODUCTION

The April 1994 elections were a major victory for the democratic forces in our country. We are now in the midst of a profound transitional struggle.

Through the RDP we provided the only viable vision for change in our country. It is a vision based on meeting the needs of the impoverished majority of our population, through a people-centred, people-driven developmental process. This is a vision that our opponents do not dare to challenge openly.

The adoption of the RDP by the GNU as its governing mandate represented another victory for the democratic forces. But the fact that virtually all political parties and other significant formations have, in theory, accepted the RDP does not mean that they all share our vision. Indeed, we have witnessed an intensified ideological and political contest around the character, content and implementation of the RDP.

The responsibility for providing political leadership and asserting influence over the RDP process lies with the broad democratic movement, in and out of government. Through the RDP Council we seek to consolidate the capacity of our popular formations to play an active role in the RDP.

2. CHALLENGES

2.1 Maintaining cohesion and coordination

A large part of ensuring effective cohesion and coordination lies with our democratic government. But our democratic political, MDM and CBO formations also have a critical coordinating role. There are at least four major aspects to this:

  • helping to reinforce government efforts at strategic coordination;
  • from the side of civil society, helping to safeguard against tendencies towards the bureaucratic, technocratic stifling of the RDP vision;
  • ensuring that within and between our democratic formations we help to find the right balance between our own specific sectoral/constituency concerns and the bigger South African (even Southern African) transformational picture; and
  • ensuring that we are able to drive a strategically coherent transformation programme through the host of multi-party participatory forums that now exist in our country - NEDLAC, LDFs, Community Policing Forums, PTSAs, university transformation forums, etc. etc. In all of these forums there are (and there need to be) a wide range of forces, many of which are not spontaneously sympathetic to the transformational goals of the RDP. Our democratic formations must, at all levels and in a vast variety of sectors, be able to coordinate their activities within these broader forums.

2.2 RDP implementation

As with strategic coordination, RDP implementation requires, in the first place, the effective and determined marshalling of the resources and capacities of government. But RDP implementation also requires the active participation of the great mass of our people. Without the active mobilisation of popular skills, aspirations, resources, and local knowledge the RDP is not going to be implemented.

Active popular involvement in RDP implementation includes:

  • support for progressive government initiatives;
  • helping to set priorities and goals;
  • ensuring that government institutions act in a transparent, efficient and accountable way;
  • helping, through organised popular pressure, to overcome either bureaucratic or private sector resistance to transformation.

3. OUR PRESENT CAPACITY

It is clear that this kind of popular participation requires well organised democratic political, MDM and CBO formations with an organised presence on the ground.

However, our ability as democratic formations to help build a people-driven RDP is at present uneven. Both individually, as different formations, and collectively we are hampered by many organisational weaknesses.

Many of the reasons for our present limitations are well known, and they include:

  • we have all, in varying degrees, suffered destabilisation as a result of the re-deployment into new positions in government, the legislatures, parastatals (and, to some extent, even into the private sector) of many of our leading cadres;
  • external funding for many of our formations has ended, or is diminishing;
  • the need, in the new conditions, for us to shift (at least to some extent) our strategic focus from anti-apartheid resistance towards a more developmental mode of struggle. This shift does not mean that the need for mass mobilisation or organisation, or mass resistance to the blocking of transformation has now disappeared. But clearly, we have to adapt to new challenges, which will certainly require the deployment of many of our old MDM skills, but now with new purposes. This adaptation has not always been easy.

None of these difficulties is insuperable. Each of our formations have begun to address them in various way. Can the RDP Council system also help us, individually and collectively, to meet the new challenges?

4. ACTIVITIES OF THE RDP COUNCIL

In our discussions and also, in a limited way, in actual practice at least five potential areas of activity for the RDP Council have started to emerge:

  • Mobilising grassroots involvement for the RDP;
  • Building capacity for and inputting into the policy formulation process;
  • Cadre development;
  • Communication;
  • Building international links.

4.1 Mass mobilisation

The character of the Masakhane Campaign thus far (heavily weighted to government and narrowly focused on the payment of rates) is, in effect, partly an indication of our own organisational and capacity weaknesses. We need to be able to build our capacity, both as separate formations and collectively, to be effective grass-roots, campaigning structures. We need to acquire, once more, the capacity to organise door-to-door, to launch media campaigns, to convene people's forums, etc.

4.2 Building capacity for, and improving our input into, the policy formulation process

The unequal power relations in our society, in terms of resources and skills, impact upon our own capacity to participate in policy formulation. As a result, business and some sections of the bureaucracy continue to dominate policy formulation.

4.3 Cadre development

As noted above, our capacity has been affected by the re-deployment of thousands of cadres, and we need to build new layers of leadership within the broad democratic movement. The RDP Council might act as a useful forum through which we are able to cooperate in this task. The proposed ANC political education school, for instance, could be a resource that helps all allied formations.

4.4 Communication

For effective coordination of RDP Council activities we need an efficient communications strategy, mobilising all the resources at our disposal. In the first place, we need resources to network the activities of the RDP council. Participating organisations should commit themselves to exchange information relevant to the objectives of the RDP Council.

To help popularise active mass involvement in the RDP, a communications strategy should also include a media liaison capacity. In this respect, media, like community radio, video and newspapers, which have a close potential affinity with our own objectives, should be particularly engaged.

4.5 Building international links

Globally, the forces of free market liberalism are powerful, and they are impacting negatively on developmental efforts throughout the Third World.

There are, however, also powerful social and political movements, in both the South and North, with aims similar to our own. These formations have their own rich and valuable experience, and we need to share with them, and learn from them.

We need also to link up with our global counterparts, in both the North and South, taking up joint campaigns against, for instance, the irresponsible activities of the toxic waste trade, or against the unsupportable debt burden on the South, etc. etc.

5. CHARACTER OF THE RDP COUNCIL

The RDP Council has evolved as a broad alliance of democratic forces in SA. Our formations have a proud record of work amongst oppressed communities, and most of us were involved in the original elaboration of the RDP document. The Council has embraced a diverse range of progressive formations including political formations and trade unions, civics, students, teachers, cultural, health, religious and human rights groups, rural, sports, youth, women and environmental formations, and progressive NGOs and CBOs.

The participants in the RDP Council have all tended to affirm the centrality of the ANC and Tripartite Alliance in providing leadership in the transformation process, without renouncing their own respective organisational autonomy.

The RDP Council was established and has been driven by its participants through sectoral and cross-sectoral forums. The diversity of our autonomous formations and location among the mass of the people lies at the heart of the potential strength of the RDP Council.

In the period of its existence the RDP Council has also been able to build fairly dynamic linkages with both government and parliamentary structures on the one hand, and our democratic movement formations on the other. We see this as an important ongoing function, but which has two potential dangers that we are determined to avoid:

  • the danger of becoming gatekeepers. We hope to facilitate the contact between government and organised democratic formations. We must, however, avoid setting ourselves up as gatekeepers, attempting to monopolise channels of communication.
  • the danger of becoming little more than a transmission belt for government perspectives. The RDP Council has always been well aware of this danger, and has, from the outset, been careful to assert its autonomy. However, the danger is ever-present and we need to be vigilant about ourselves.

These are some of the general characteristics of the RDP Council, as they have emerged over the last period. But what about the specific organisational features of the RDP Council. In the past months there has been a debate at national and provincial levels, and several options have been proposed:

6. SCENARIOS FOR THE RDP COUNCIL

There are several somewhat different scenarios around how the RDP Council should be structured and should function.

These differences basically relate to:

  • the degree to which the structure should be formalised; and
  • the main area of focus.

6.1 Degree to which the structure should be formalised

Should the RDP Council be:

  • a largely ad hoc, network that helps to co-ordinate cross-sectoral campaigns and access to government or legislatures?

or

  • a more structured entity - a network directed by sectoral and cross-sectoral forums, with established democratic decision-making structures (like steering committees), in which decisions are made collectively, but in which implementation of campaigns is essentially carried out autonomously by our different formations?

or

  • a still more structured entity, with a more full-time staff at national (and perhaps provincial) level, with the capacity to more directly activate and facilitate campaigns, without, of course, undermining the autonomy of participating formations?

6.2 Main area of focus for the RDP Council

Here the differences largely concern whether the main focus of the RDP Council should be:

  • advocacy work, lobbying government, inputting into legislation, etc.; or
  • more campaigns oriented, programme driven in character.

Clearly, neither of these is necessarily mutually exclusive, the debate concerns emphasis.

Clearly, also, the debates summarised under 6.1 and 6.2 need to be interrelated. The kind of structure we hope to build will obviously need to be related to the kind of tasks and challenges we intend emphasising.

LET US ORGANISE AND MOBILISE FOR DEMOCRATIC TRANSFORMATION!

FORWARD TO A PEOPLE-DRIVEN RDP!

A Free Trade Agreement with Europe?

Ongoing trade negotiations between SA and the European Union are a largely neglected area in our national debate. Rob Davies is an MP in the National Assembly and he recently participated in the EU-ACP Joint Assembly in Windhoek. He argues that we need to follow developments in these trade talks much more closely, as they can have a profound impact on our prospects for promoting growth and development in our country.

In mid-March the General Affairs Council of the European Union finally approved a detailed negotiating mandate for a Free Trade Agreement between the EU and SA. This matter has been pending since last October, when the European Commission drew up a draft mandate for approval by the Council. It is fairly well known, at least to those who read the inside pages of business supplements, that special interest groups in Europe have been waging a determined rear-guard action to resist granting duty free access to the EU market to a number of our, mainly agricultural, products. The impression that might have been gained by those relying on such reports for their information is that the only real issue was whether the protectionist lobby in certain European countries would be overcome, and that if they were, as now appears to be the case, it would all be plain sailing towards wonderful new opportunities for access to the EU market. Reality, I am afraid, is a little more complex. One battle in Europe may now be over, another, and for us a much more difficult one, is just beginning.

The mandate the EU negotiators have received seeks a fully reciprocal trade agreement, in which we will be required to make concessions as well as receive benefits. Shortly before the April 1994 elections, the EU expressed its desire to support the process of democratisation in our country, and it invited us to begin negotiations for a new trade and cooperation agreement. On the basis of research undertaken both in SA and Europe, the GNU indicated that our preferred option was for inclusion in the Lome Convention, including on certain terms in the Lome trade chapter.

In the initial negotiating mandate of the EU negotiators in the middle of last year, our inclusion in the Lome trade chapter was specifically precluded. But it was agreed that we could negotiate qualified membership in Lome, with non-trade benefits. Instead of our original expectations, the EU proposed that we explore the possibility of a Free Trade Agreement (FTA), which they claimed could give us many of the market access benefits we had sought through Lome. Our negotiators agreed to explore this option on the understanding that "nothing is agreed until everything is agreed".

The draft detailed mandate prepared by the Commission last October proposed a fully reciprocal FTA covering 90% of each party's trade, with an element of asymmetry in the pace at which each party would implement the required tariff reductions. Calculations made on the basis of figures in the draft mandate itself indicated that this would have required the EU to remove duties on only 7% of its imports from us (mainly agricultural products), but would have required us to remove duties on 46% of our imports from the EU. Although the draft proposed some degree of asymmetry, in that the EU would implement its obligations faster than we would be required to implement ours, it suggested that our reciprocal obligations should be implemented in defined phases - some immediately, a significant proportion after only four years, and the remainder after the end of the World Trade Organisation's maximum ten year grace period.

Pressure from special interest groups within the EU has resulted in a sizeable list of mainly agricultural products that the EU negotiators will seek to exclude from an FTA, so that it appears now that we are no longer talking about opening up 46% of our market to gain 7% additional duty free access to the EU, but something considerably less than 7%.

What happened to solidarity?

I believe that we should be sending out a clear signal, right at the outset of this phase of negotiations, that an acceptable trade agreement will need to take much greater account of our specific needs and realities, and thus represent a considerable improvement over what is currently on offer. We would be naive to ignore all the clear signals that demands for reciprocity have replaced expressions of solidarity as the central feature of North-South trade agreements. We can accommodate some demands for reciprocity from the EU - if for no other reason than that 66% of our imports from Europe will already enter duty free when our GATT Uruguay Round obligations are implemented. But many of us would have difficulty in accepting the degree of disparity to our disadvantage in the distribution of costs and benefits envisaged in the current EU proposals.

It is sometimes difficult to remember, when we see what is currently on offer, that all of this arose because the EU said it wanted to help us! We account for only 1,9% of EU imports, while the EU supplies nearly 40% our ours. Our GDP is half that of Belgium's, one of the smaller EU members, which has one quarter of our population. The human development index for our black population is lower than that of many ACP (Afro-Caribbean-Pacific) countries. Yet the EU, one of the most powerful trading blocs in the world, appears to be treating us in these negotiations as though we were just another competitor, without the special development needs it claims to support. Indeed, up to now, it has been much more sensitive to the claims of special interest groups in Europe, than it has to its professed commitment to promoting development in Southern Africa.

The concept of asymmetry, which the EU first raised, is being more and more eroded with every new proposal we see. It now appears that the EU is prepared to accept asymmetry only in the pace of implementation - and even here it is telescoping the timetable that we are expected to implement. But apart from the pace of implementation, it now wants to see complete parity in the obligations accepted by the EU and SA. We need to challenge this. There is no reason why there should not be asymmetry in terms of content as well. The stronger party should be required to give more than it receives. Even under World Trade Organisation rules it is accepted that the extent of liberalisation does not have to be absolutely identical.

To be sure, there are sensitivities and wholly understandable concerns in Europe about adjustment costs and the potential impact of an FTA on jobs. But we need to make very clear to the EU that these kinds of sensitivities apply, and with greater force, in a country like our own with an unemployment level of 40% or more. Our priority now is to give effect to President Mandela's call to transform jobless growth into sustained employment creation. We accept that creating competitive industries is integral to this process, but this requires time and resources. We are certainly not there yet. The Uruguay Round obligations, which are only now beginning to be implemented, are already having a significant impact on some of our industries.

There is also the critical question of our region. Our negotiators have already indicated that any trade agreement with the EU must take account of the region, and promote rather than undermine regional cooperation. It is very important that we reinforce this stance. There is a great deal of concern in our region about the consequences of a SA-EU Free Trade Agreement. With an FTA, emerging industries in other countries of our region, many of which are naturally directed at the South African market, will suddenly be up against an unrestrained flood of exports from one of the major trading blocs in the world.

The time has come for progressive forces in our country to think strategically about these SA-EU trade negotiations. We need to unpack the implications of a Free Trade Agreement. We need to move beyond the rhetoric, and consider carefully what exactly is at stake.

It makes you think

SA's formal sector employs the same number of people as it did in 1980. The number of blacks working in South African factories at present is the same as in 1975, more than 20 years ago. (Statistics from the National Productivity Institute).

The real gravey train

Executive directors of Murray and Roberts earn salaries averaging R2,04-million EACH per year, which works out to R170,000 a month. These figures are based on the total earnings of executive directors at Murray and Roberts and then divided by the number of such directors, as published in the company's annual reports. It probably excludes additional benefits and perks.

Market-driven

Even more astounding is the fact that the very prophets of the market are the ones who happily flout the market's verdict. We are constantly told that the market is the best indicator of performance, and that market-related performance should determine reward.

If that's the case how do you explain the most recent salary increases for executive directors in Murray and Roberts was 50%, but profit growth was only half of that at 25%.

Dorbyl executive directors did even better. Salary increases for Dorbyl directors rose 201%, while profits were down 25%. While at Anglo's AECI the salary increase for executives was 122%, while profits were down 8%.

The Labour Market and Job Creation

Vishwas Satgar and Gwede Mantashe take a critical look at the neo-liberal argument that the labour market in SA is too inflexible, and that its "rigidities" are the cause of unemployment. On the contrary, they argue, an active labour market with more effective regulations is required.

In the both the industrialised countries of the North and the so-called "industrialising" societies of the South, unemployment is a serious socio-economic challenge. Within Western economies, mainly the European OECD countries, there has been a sharp increase in long-term unemployment. Within sub-Saharan Africa there has been a persistent fall in formal employment and wages, and a general trend towards the informalisation of the economy. SA mirrors this trend, and unemployment and under-employment are exacerbated by the legacy of apartheid. The lack of jobs also directly relates to the continuation of poverty and inequality of the previously oppressed majority. With the election of a democratic government the objective of full employment appears to be occupying an overarching place on the policy-making agenda.

In this paper the magnitude of the unemployment problem will be defined, with a particular focus on the primary and secondary labour markets in South Africa. Within this context we shall focus on frictional and seasonal unemployment, and hence the policy solution of active labour market policies is proposed. We will not, in this paper, be taking on the larger issue of structural or long-run unemployment. In addition, the paper attempts to locate policy thinking around active labour market policies within the mainstream debate of "flexibilisation". The neo-liberal orthodoxy of deregulated labour markets is engaged with and debunked in the context of the conditions prevailing in the South African labour market.

DESCRIBING THE UNEMPLOYMENT PROBLEM

According to the Central Statistical Services there are 14.6 million economically active people in the country, of whom 8 million (56%) are employed in the formal sector, 1.6 million (11%) in the formal sector, and 4.7 million (33%) are unemployed. Although calculations of unemployment have not produced very reliable statistics, nonetheless the breakdown of unemployed in SA suggests at least 40% of the unemployed are African, 50% are women, 40% are located in rural areas (like the Eastern Cape and Mpumalanga), 22% in metropolitan areas (1 in every 5 jobless person comes from Gauteng), and over 50% are between 16 -24 years old.

Currently there have been significant job losses in certain sectors of industry. In the mining and quarrying sector, there was a decrease in the number of jobs from 725,000 in 1987 to 600,000 in 1995. In the manufacturing sector overall employment dropped from 1.5 million in 1987 to 1.41 million in 1995. In the food processing sector, employment declined from 200,000 in 1990 to 175,000 in 1995. In the clothing and textile sector, employment declined from 240,000 in 1988 to 202,000 in 1995. In the construction industry there has been a decline from 450,000 in 1992 to 375,000 in 1995. In the electricity, gas and water supply sector there was a decrease in jobs from 66,000 in 1985 to 40,000 in 1995. In the transport sector there was a decline from 450,000 jobs in 1982 to 275,000 jobs in 1995 (excluding taxis and the rest of the informal sector). In the case of electricity and transport, much of the job loss took place in parastatals. More than 122,000 jobs were lost at Transnet between 1984 and 1994, and 25,000 jobs were lost at Eskom in the same period.

THE DEBATE ON CAUSES : EMPLOYMENT VERSUS LABOUR STANDARDS

Since the collapse of Eastern Europe, the West has proclaimed the triumph of the market. Neo-liberal economics, advocated by most Western governments and the Bretton Woods institutions (the World Bank and the IMF), has packaged the capitalist alternative as a new orthodoxy. Its constituent elements are privatisation of state assets, liberalisation of exchange and tariff controls, export led growth, fiscal discipline, contractionary monetary policy, and deregulated labour markets.

Essentially, the explanatory basis for deregulation hinges on the analytical conclusion that increases in wages in particular, and the economic cost of labour standards in general, are the fundamental cause of unemployment. The policy conclusion emanating from this suggests the need for "flexible" labour market policies, and institutions that can bring about rapid adjustments on the supply side. In short, worker rights and labour standard "rigidities" have been removed through deregulation.

Most countries that have adopted this policy prescription have produced labour markets with decentralised bargaining trends, lower standards of dismissal protections, atypical employment categories like part-time, temporary and casual employees. Subcontracting, home industry and the restructuring of the internal labour market within most enterprises into core permanent employees and peripheral temporary employees has also emerged, with the latter having lower standards of protection. In countries of the South "flexibility" has amounted to a "race to the bottom" in terms of labour standards and protections. Export processing zones, social dumping, union bashing and the use of child labour have become prominent features.

Within the South African labour market policy debate, the World Bank has measured the correlation between wages and unemployment and has concluded that wages have indirectly contributed to unemployment. The argument made by Peter Fallon, the author of the World Bank document, suggests that wages have been the main cause for changes in factor prices and thus, to this extent, responsible for unemployment. The SA Foundation document, Growth For All, is more bold in its assertion that increases in wages are one of the main causes of unemployment. Stemming from this is a neo-liberal policy solution which envisages a two tier labour market in which part of the formal labour market is consistently informalised through deregulation. The envisaged second tier introduces a low wage, high growth, "sweat shop" economy "free" of the rigidities of labour standards. Underlying this policy prescription is a clear attack on the labour movement in SA.

In the light of "flexibilty" and deregulation being asserted as answers to the unemployment problem, it is important to ask whether these measures, when applied, have actually created employment. Has unemployment declined because of flexibility? Numerous studies have shown that "flexible" labour market policies and institutions do not guarantee employment. Indeed, most research confirms an increase in unemployment. Nevertheless, we should still ask whether flexibility, in the specific South African context, will help. Will deregulation of the labour market deliver jobs ?

REGULATION AND THE COST OF LABOUR

Labour market policy and institutions in SA have allowed for wage setting through collective bargaining and administrative determinations. Labour standards relating to basic working conditions, occupational health and safety, and unemployment have been regulated by a system of labour and social security laws. The neo-liberal economic argument that worker rights and labour standards are disincentives and rigidities which cause unemployment is simply not sustainable in the context of the labour market in SA. Wages, non-wage costs and legal protective standards - unfair dismissal and retrenchment laws - already display a marked flexibility to the disadvantage of workers. This is evidenced in the following areas:

DISMISSAL AND RETRENCHMENT LAWS

Since the introduction of the unfair labour practice concept, the procedural and substantive standards of protection afforded to workers in dismissal situations have been ineffective. The main reason relates to the inconsistencies and patchwork nature of the case law developed by the industrial court. In other words, it has been very difficult for workers to fully understand their unfair dismissal rights.

In the context of mass dismissals for strikes, for instance, even if the strike was legal this was not a sufficient guarantee that it was fair and hence dismissals for legal strikes were acceptable in certain instances by the industrial court. In terms of retrenchment, the labour standards conferred on workers were also inadequate. Retrenchment standards essentially amounted to the right to be consulted and the right to severance pay. Over time, the former right, which actually presented workers with a fait accompli, was brought into contention within the industrial court merely on whether the decision to retrench should be made before or after consultation. The right to severance pay was also eventually taken away by the industrial court.

WAGES

In the South African labour market, the neo-liberal assertion of wage inflexibility is questionable. In the first place, real wage setting through collective bargaining has happened very unevenly. The dominant form of collective bargaining happens at plant level, with centralised bargaining arrangements not very widespread. Formal bargaining councils - registered as industrial councils - have amounted to 86 in 1993, covering 20,000 employers and approximately 855,500 workers. Little more than 10% of SA's workforce has been covered by industrial council agreements. If the public sector and even the informal bargaining councils - like the mining forum - are included, as well as the fact that exemptions have also been provided for, not more than 35% of SA's workforce has gained the benefit of centralised bargaining arrangements.

In the second instance, although SA has about 3 million unionised workers, suggesting a high unionisation rate in comparison to developing countries, which stood at about 47,3% in 1992, this does not necessarily translate into huge real and nominal wage gains for all workers. This is evident if the statistics are disaggregated across sectors. For example, union density in clothing and textiles exceeds 85%, obviously suggesting a better bargaining outcome. But in chemicals and in agriculture, union densities are 43% and about 5% respectively, implying very moderate bargaining outcomes.

Thirdly, it is important to recognise that SA has one of the worst income inequality situations in the world. A recent SALDRU survey on poverty has revealed a Gini coefficient of 0.61, which expresses itself simply as follows: "The lowest 40% of households, equivalent to 53% of the population, account for less than 10% of total consumption; while the top 10% of households, with only 5.8% of the population, account for over 40% of consumption". In wage terms, between 35% - 50%, of the approximately 8 million people employed, earn less than the Minimum Living Level, currently averaging R970 per month.

With this situation, it is only logical both economically and politically to argue for the need for widespread centralised bargaining arrangements in order to enable redistribution.

STATUTORY WAGE DETERMINATIONS

As a result of the limited reach of collective bargaining arrangements, unorganized sectors, particular within the secondary labour market, were given the protection of administrative wage determinations through the Wage Act. However, this Act excluded 1.8 Million domestic and farm workers and by 1991 only about 600,000 workers were covered. Even these determinations were not sufficiently above the minimum living level income of R970.00. Compounding the ineffectiveness of the Wage Act has been its inability to police wage determinations and therefore compliance was not widespread.

NON-WAGE LABOUR COSTS AND UNEMPLOYMENT BENEFITS

Generally, non-wage labour costs are referred to as the social wage. These are benefits that accrue to workers for health care, unemployment, and, in some instances, transport. The costs of these benefits are normally carried by the employer, the state, or by joint employer-employee contributions. In SA health care benefits have been limited for black people, and the privatisation of health care made such care even more inaccessible. Medical aid schemes have also been financially out of the reach of most workers.

Unemployment insurance in SA operates for a finite period of six months, and it is intended to target only frictional unemployment. The financial contributions to the Fund are made by both employers and employees through a basic levy of 0,9% on the payroll and on employees' incomes. The problems with UIF relate, in the first place, to the fact that it does not have a wide scope and for a long time it has excluded farm workers, domestic workers, seasonal workers, and new entrants to the labour market. Secondly, the actual payouts are very small and are calculated as a maximum benefit of one week at 45% of a worker's wage for every six weeks of contribution.

Transport has generally been a serious structural problem in SA for most black workers. Townships have been built at great distances from industrial areas and other places of employment, making transport costs a major problem. Subsidisation of transport by employers is not a common practice.

The case for a flexible labour market in SA does not have a justifiable basis. The argument that wages and non-wage labour costs are the cause of unemployment is unacceptable in the light of the inefficient, fragmented, and minimalist nature of labour standards. At a policy level, it is apparent that reform of labour standards, social security laws and benefits needs to see a general re-regulation and not deregulation.

To understand unemployment in SA, particularly seasonal and frictional unemployment, one has to look for alternative explanations beyond labour market "rigidities" and "disincentives".

ALTERNATIVE EXPLANATIONS OF FRICTIONAL AND SEASONAL UNEMPLOYMENT

SA has a dual economy, a sky-scraper and a spaza shop economy. In the sky-scraper economy, there is an emphasis on digital technology and other technologically intensive methods of production. The labour displacing effects of capital intensity cannot be underestimated as a major reason for retrenchments and frictional unemployment in most sectors of the economy.

Neo-liberal conceptions of the labour market, because of an overemphasis on the equilibrating price of wage labour, have obscured the cost of other production inputs, like capital and capital goods. It is important to note the macro-economic correlations between interest rates and the cost of capital and the import cost of capital goods and the exchange rate. These effectively also increase the cost of production and hence force "rational" solutions that aggravate unemployment.

Through industrial restructuring and public sector transformation, frictional unemployment is also on the increase. In the clothing and textile industry the excessive speed of tariff liberalisation has led to the loss of about 18,000 jobs over the past few months. Public sector transformation has also placed an emphasis on right-sizing through attrition and obviously the outcome will be more frictional unemployment.

Macro-economic policy has also been highly constricting. Fiscal policy has been hemmed into a notion of fiscal discipline that wants to limit government deficit spending to below 5%, while interest rates have been excessively high, leading to inflationary overkill. The consequences for employment and job creation have been disastrous. High interest rates have also led to insolvencies and hence further unemployment. In short, macro- economic policy in SA is not conducive to stimulating economic activity and job creation. Instead, it is contributing to the problem.

Since the formal land dispossessions that began in 1913 and 1936, black labour, in particular, was forced into a migratory pattern towards the urban centers. This facilitated the regulated supply of labour and also the depression of the wage value of labour. In the context of the mechanised farming sector, land expropriations have been one of the main reasons for the continuity of seasonal unemployment.

AN AGENDA FOR ACTIVE LABOUR MARKET POLICIES

According to Neva Makgetla, active labour market policies are state driven and are intended to target and ameliorate frictional unemployment. At the same time, the productivity capacity of labour is enhanced. Active labour market policies are an important component of seeking to overcome both frictional and seasonal unemployment. Active labour market policies attempt to prevent short run unemployment becoming a long term or structural problem. The state intervenes to reskill and empower workers in order to take on new jobs. Employment maintenance or creation is not left to the market but is consciously addressed by investing in people. What follows is simply the identification of the elements of a package of labour market policies to address frictional and seasonal unemployment. As an agenda, it is intended to serve as a basis for debate and discussion.

To tackle frictional unemployment the following should be considered:

(1) The provision of institutional capacity to train workers in different industries in accordance with standards laid down by the National Qualifications Framework and the South African Qualification Authority. This should facilitate the training of workers in respect of:

  • adult basic education;
  • recognition for prior learning;
  • portable skills acquisition for career pathing vertically and horizontally.

(2) The supply of information through job placement agencies. This kind of information infrastructure can emerge in the context of local economic development, through local government initiatives, or through bargaining or statutory councils.

(3) Unemployment insurance disbursements are necessary. Options in this regard are the following :

  • Thorough-going reform of the Unemployment Insurance Act, so that the financial pay outs and the scope of the Fund are radically enhanced; or
  • Scrapping the UIF system and replacing it with a dole system or a full-blown welfare net, buttressed by constitutional provisions in the bill rights to make it sustainable.
  • If the policy is to be state driven, then the financing has to be either directly by the state or indirectly by the imposition of a payroll tax.

(4) Formulation and implementation of an active labour market policy should be informed by a national framework driven by worker participation. This framework can be embodied in a Social Plan Act, which should introduce an element of compulsion. The alternative is to allow unions and the state in different industries to engage employers to develop industry specific social plans that bring together the constitutive elements of an active labour market policy.

An active labour market policy approach to seasonal unemployment has two options :

  1. The welfarist option which would either bring seasonal workers into the ambit of a reformed Unemployment Insurance Act and Fund or a new welfare net; or
  2. the empowerment option which entails land redistribution, training and enabling support and a people-driven cooperative movement.

CONCLUSION

In the struggle against unemployment, active labour market policy is a necessary but not a sufficient solution to create jobs. It can be an essential policy ingredient to solve frictional and seasonal unemployment, however, it does not address the poverty of the structurally unemployed. To confront the challenge of structural unemployment and even the effective implementation of active labour market policies, full employment and labour absorbing growth would have to inform the general direction of policy and development strategy. This would entail the removal of macro-economic, supply side and structural constraints and the introduction of a politically motivated policy reorientation away from "win-win" approaches to policy outcomes that benefit the working class and the rural and urban poor.

Western Media - getting ready to explain a cancellation of the Russian elections?

At the time of last December's Russian Duma (parliamentary) elections, the major western media did their best to downplay the significance of the Russian Communist Party's electoral achievement. Now, with the more strategic presidential elections due in mid-June, and with Communist Party candidate Gennadi Zyuganov leading the polls, there are distinct signs of panic.

Zyuganov has already managed to rally a range of smaller communist, left and progressive parties behind his candidacy. He is, however, still a long way from being assured of a majority vote. The vote may well go to a second round, in which case, Zyuganov's likely opponent is the deeply unpopular, current incumbent, Boris Yeltsin. Calculations are that Zyuganov presently has the support of parties and groupings representing 24 million voters. But he needs another 12 million or so to be sure of winning. Much of the Russian electorate remains undecided.

Meanwhile, Yeltsin is using every devious trick in the book to bolster his own deeply compromised prospects. Three of the four major national television channels are directly under his command, and the head of the relatively independent fourth channel has just been drafted into Yeltsin's campaign team.

Despite his administrative powers, and despite his unabashed preparedness to abuse his presidential privileges for electoral purposes, Yeltsin is in deep trouble. His years in the presidency have seen a deepening economic, political and social crisis for Russia. Industrial production in 1994 fell to half of the 1990 level. In 1995 GDP fell again by 4% and inflation was 131%. Yeltsin's handling of the Chechen situation has often been no more than a mixture of brutal bungling.

In its April 8 issue, Time magazine writes: "There are two ways Boris Yeltsin can prevent the Communist Party leader Gennadi Zyuganov from becoming President: by defeating him in the election or by making sure the election doesn't happen in the first place. Given the communists' strength and Yeltsin's deep unpopularity, there is a chance that he may choose the second method."

All of this is accurate enough. Indeed, the Time article then documents a number of indicators that Yeltsin is in fact closely studying the possibilities of abolishing the presidential elections. All of this is sinister enough.

Even more sinister is that the Time article, rather than serving a warning on Yeltsin of the grave consequences of such a move, starts to give him the wink.

"Yeltsin is generally acknowledged", it tells us without evidence, "as the best guarantor of his country's democracy. But in the past 1,000 years, no Russian leader has ever relinquished power on the basis of a national plebiscite. Like anything else that tries to withstand the force of history, Yeltsin's devotion to democratic principles will have to be formidable indeed if it is to survive the upcoming test."

Everyone, including Time, knows that Yeltsin's devotion to democracy is very, very far from "formidable". After all, this is the man who bombarded, with tank fire, his own parliament in October 1993. What other conclusion can we draw, then? Time is clearly softening up public opinion in the West for a Russian constitutional coup.

Cold war bogeys

The campaign against Zyuganov in the West has seen all the time-honoured anti-communist bogeys hauled out of the Cold War cupboard and dusted off. Indeed, a few more bogeys have had to be invented. Every commitment from the Russian Communist Party to multi-party democracy is simply listed as a further example of "how deceitful" they are. The London-based The Economist recently conceded that at the February World Economic Summit in Davos, Switzerland: "Mr Zyuganov danced rings around Anatoly Chubais, the father of Russia's privatisation programme, whose attempts to insist that the Communists would ruin Russia fell on deaf ears." But, claims The Economist, Zyuganov's performance was "strictly for external consumption". A different, "internal Russian Zyuganov", dreaming of a return to stalinism, and not without a hint of "anti-semitism", is supposed to exist. Not a shred of evidence is ever offered for these character-assassinating insinuations.

All that the main-line Western media can offer as evidence of "stalinism" is the very sensible reform package that constitutes the platform of the Russian Communist Party. The proposals include:

  • the adoption of a new economic course;
  • raising minimum wages, pensions, grants and benefits;
  • mercilessly stamping out organised crime and banditry;
  • restoring public control over manufacturing industry;
  • ending the pillaging of state and public property under the guise of privatisation;
  • supporting peasants, farmers and collective farm workers, by introducing parity for manufacturing and agricultural production;
  • addressing the governments and peoples of the republics of the illegally dismembered Soviet Union, calling for the voluntary recreation of the union; and
  • preparing and upholding a draft constitution that guarantees power to the workers by means of soviets (councils) at all levels.

If you are looking for an heir to the autocratic, arbitrary and anti-democratic traditions of Stalin you will not find them in this programme. If an heir is needed, the Western main-line media should look a little more closely at their own darling, Boris Yeltsin.

Russian nationalism

Another major accusation against Zyuganov is that he is cosying up to right-wing Russian nationalism, with a view to forming a so-called "red-brown" alliance. The potential voting constituency for Zyuganov is, indeed, diverse and complex. And diversity and complexity are particularly a feature of present-day Russian nationalism.

The agenda in Washington and Bonn (as competing as their own strategic objectives might also be), in the dismantling of the former Soviet bloc, has been to encourage some nationalisms. In particular, they have been happy to foster the emergence of small to medium nation states, where these have helped to undermine viable, multi-ethnic states. They have also particularly fostered ethnic nationalism in the most industrially advanced pockets of Eastern Europe - thus their encouragement of the Czech Republic (a breakaway from Czechoslovakia), or, in the case of the former Yugoslavia, the German government's support for the breakaway of Slovenia.

But the case of Russia is different. With its size, its major resource base, its massive population, its military capacity, and, despite all the present crises, the relatively high levels of education of its people, the country still constitutes a potential threat to the market hegemony of the US in the world, and to Germany in Europe. Even a successful capitalist-path to the restoration of Russia as a major global force is not acceptable to Washington or Bonn. Their agenda has been the dismantling of the former Soviet Union, and the integration of Russia into the world capitalist system as a subordinate, peripheralised exporter of cheap natural resources. Their agenda is the "third worldisation" of Russia.

It is in this intended (and actual) context that there is a legitimate and progressive basis for Russian nationalism. But in the depths of the present all-round crisis in the country, there are also many other chauvinistic, xenophobic, even openly fascist, Great Russian variants of nationalism - much of this is represented by another presidential candidate, the sinister and demagogic Vladimir Zhirinovsky.

One of the electoral tasks of the Russian Communist Party is to organise the legitimate sense of national grievance and of patriotism into a progressive programme for the democratic reconstruction of Russia. The challenge is to disarticulate Russian nationalism from the rightwing project. Part of the present Western media campaign against Zyuganov is, precisely, to deliberately conflate democratic patriotism and chauvinism.

The stakes are high in the upcoming (if indeed they come up) Russian presidential elections. Increasingly the Western media are becoming alarmed. A presidential victory for Zyuganov will mark a further defeat for the post-1990, global "Washington consensus". We can expect all kinds of manoeuvres in the coming weeks.

Watch this space.

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