South Africa: SA Needs an Alternative to Privatisation

analysis

Having lived through Zuma's kleptomania and still contending with the EFF's kleptocracy, some South Africa have shifted in favour of neoliberalism. But is this the solution?

According to a 2018 World Bank report, South Africa is the most unequal country in the world, with a Gini coefficient of 0.63. Intergenerational mobility is low, which means that inequalities are passed down from generation to generation. Even as the elite and the middle class in South Africa are no longer overwhelmingly white, impoverishment remains a black phenomenon.

In 2020 South Africa faces low growth and low job creation prospects; the increasing labour force is projected to exacerbate unemployment pressures, poverty and inequality. This will be the sixth consecutive year where economic growth will be below population growth.

The crisis of systemic, structural unemployment - which hits youth particularly hard - and sustained low economic growth is generally acknowledged as serious. Many commentators argue that it is not politically sustainable and point to xenophobic violence and the rise of authoritarian populism - both within the ruling ANC and in the form of the EFF - as harbingers of further dangers to come. The language of crisis is being used across the political spectrum.

The dominant voices in the elite public sphere are pushing hard for a standard set of neoliberal measures including austerity, privatisation and union bashing. A set of proposals along these lines from the finance minister has been enthusiastically endorsed by big business, right-wing think tanks, most public commentators and the International Monetary Fund (IMF).

Corruption

The public discussion, and much public sentiment, are fundamentally shaped by widespread opposition to the kleptocratic politics that developed under the administration of Jacob Zuma (2009-2018). This form of kleptocratic politics, which seeks to legitimate itself in the name of radical nationalism, and makes effective use of "fake news", continues to be strongly endorsed by a powerful faction in the ruling party and the EFF.

The severe mismanagement of state-owned entities under Zuma resulted in the squandering of an estimated R1 trillion from state coffers. This massive corruption and the wholesale maladministration of public funds have severely undermined the state's credibility among much of the citizenry, making arguments for privatisation attractive to many.

Under the administration of Thabo Mbeki (1999-2008), the government was moving swiftly to use the state and parastatal organisations to uplift the lives of the black majority. However, kleptocracy has severely hampered the government's ability to drive societal change and be an engine of economic growth. The collapse in the government's credibility is so severe that even some trade unions now support privatisation.

At the same time, support for Zuma among some prominent trade unionists and the collapse of some unions into serious corruption - and even gangsterism - have generally weakened the standing of unions in society. This has enabled a frenzy of union bashing from the right. Unions are presented, and misrepresented, as allies of the kleptocracy or - in the words of one prominent commentator - as "spoilt brats" undermining the "national interest" with opposition to retrenchments and demands for inflation-related annual increases. Former British prime minister Margaret Thatcher's notorious phrase, "the enemy within", has been used by a number of public figures to refer to unions.

Austerity

South Africa lives with the existential threat of a ratings downgrade. Whenever ratings agencies are preparing to announce their numbers, there is massive hysteria in the media about their announcement and the impact that it will have on the country. This is utilised as a pressure point for the government to introduce austerity. The public is constantly told that if austerity is not implemented, there will be a ratings downgrade, followed by a disaster.

There has also been manic media coverage about the debt-to-GDP (gross domestic product) ratio and the public-sector wage bill. According to the IMF, the estimated world average debt-to-GDP ratio for 2020 is 82.9%. The averages for advanced and emerging economies are 103.7% and 55.1%, respectively. South Africa's debt-to-GDP ratio (60.8%) is lower than that of other major emerging markets such as Brazil (92.4%), Argentina (69%), India (67.8%), Egypt (84.6%) and Pakistan (79.1%). South Africa has a GDP growth problem - not a debt problem.

Over the past three years, the government has cut spending by R200 billon; in the medium-term budget in October 2019 the treasury said that it has identified cuts of R49 billion over the next two years. It wants additional austerity measures of more than R150 billion but has not yet decided where to cut.

Austerity reduces GDP growth; the lower GDP growth rate reduces government revenue and results in a higher budget deficit and a higher level of debt. This results in an increase in the debt-to-GDP ratio.

The media has pushed a narrative that points to the public-sector wage bill as the number one option for further cuts. According to the budget statement, average remuneration in the public sector has risen by an annual average of 8% since 2010-2011, which was not much higher than the increase of 7.2% in the rest of the economy. The number of public servants as a percentage of the population and total employment is low by international standards.

The Left project

Given the malfeasance that has been foisted upon South Africa's state organs in the recent past, it is now easy for right-wing forces to conflate anti-corruption and austerity. Consequently, the right-wing economic discourse has been normalised in the country as being the only way to fix South Africa's economic problems. The maladministration within the state over the past decade has led to an increased call in the public sphere for the privatisation of state-owned enterprises.

The dominant forces using Left language in the public sphere are the kleptomaniac Zuma faction of the ANC and the populist (and also kleptocratic) race-based EFF. Unsurprisingly, owing to this usurpation of leftist language by predatory and authoritarian formations, the language of the Left has been significantly discredited and is often seen as little more than a cover for kleptocratic politics.

Under these circumstances it is vital that a Left project restore its credibility through alternative proposals to austerity, privatisation and union bashing; what is needed is a discourse and policy framework that clearly opposes both the kleptocratic politics of the Zuma faction of the ANC as well as the EFF and the neoliberal politics that are presented as the only viable alternative to kleptocracy.

The lack of an organised progressive intellectual project is one of the reasons that right-wing economic thought has managed to take root. Where there are progressive economists and policy experts, they are generally not linked to material political forces. As a result, very little in the way of an alternative to neoliberalism is being presented in the country.

Linkages need to be made between the experience of South Africa and the experiences of other countries where austerity measures have been used and the effect that these measures have had on the stability and security of the state.

This is an excerpt from the Tricontinental dossier: The Word Oscillates Between Crises and Protests.

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