4 December 2009

Nationalising in order to privatise?

The nationalisation debate…more and more curious

Jeremy Cronin, Umsebenzi Online, Volume 8, No. 22, 3 December 2009

The present discussion on nationalising the mines runs the danger of becoming too narrowly focused. It's a mistake to detach the question of the ownership of the mines from the overall strategic thrust of our economic policy programme.

This strategic programme has emerged with increasing clarity from recent SACP and COSATU congresses, and from the ANC's December 2007 watershed 52nd national conference. Our shared strategic perspective has been further consolidated at our most recent mid-November Alliance Summit. If we are to make progress in the discussion around the mining sector, for instance, then we need to begin by identifying what we are saying is our key overall strategic economic priority. Last month's Alliance Summit summarised it crisply as "transforming the structure of the economy and moving to a different growth path".

So what is problematic about the structure of our economy? Why do we need to move to a different growth path? At the heart of our problems is that even when our economy has been growing, as it did in the recent past, this growth has tended to reproduce (and in some cases worsen) racialised inequality and under-development.

In 1994 unemployment was around 24%. Just before the global recession began to bite locally, in the latter half of 2008, after some fourteen years of "unprecedented" growth, we had barely managed to return the unemployment level back to the same crisis level of 24%. After 15 years of democracy, and notwithstanding many important efforts, we succeeded in going round in a circle! The rich got richer, but our country was not transformed. In the present recessionary conditions the unemployment levels are now rocketing up, with nearly 1 million jobs lost in this year alone.

Why is it, then, that even in the "good times", our economy reproduces crises of inequality, poverty and general under-development?

The answer is that we are still locked into basically the same semi-colonial economic growth path that was first forged in the imperialist-dominated mining revolution in SA over one hundred years ago. Our economy remains excessively dependent on primary commodity exports. On the other hand, we are excessively dependent on imports of capital goods (machinery), technologies and luxury goods. Even relative to many developed capitalist economies, we have extremely high levels of corporate concentration ("monopoly capital"), especially in the minerals and energy complex, in finance, chemicals, and increasingly in agro-processing. These high levels of concentration continue to shape our economy in many problematic ways. Our economy tends to be capital not labour-intensive. It is extremely energy-intensive, and the infrastructure (transport logistics, ICT, water, energy) is all skewed towards the narrow interests of monopoly capital.

All of these features, along with collusive, monopoly pricing practices by the dominant monopoly capital sectors, serve to throttle any organic growth of more labour-intensive, medium and small-scale light manufacturing, agricultural and service sectors – not to mention cooperatives. High levels of unemployment and skewed infrastructural and spatial development narrow our national market, and further entrench our export-oriented dependency. Historically, big capital in SA has also acted aggressively as a sub-imperialist power, undermining a more balanced approach to regional development and production, further weakening our potential regional market.

This is why our recent Alliance Summit statement is absolutely correct to identify the transformation of the STRUCTURE of our economy as the key strategic task. In fact, this is now the key multi-class and, indeed, non-racial patriotic task of the national democratic revolution in the present conjuncture.

And this is why we need always to ensure that any economic discussion – whether it be about BEE, or infrastructure development, or nationalising the mines – always returns to this fundamental question: Will this or that specific economic policy proposal actively contribute to transforming the highly problematic STRUCTURE of our economy? Or will it, wittingly or unwittingly, simply help to REPRODUCE the same essential semi-colonial structural features?

The strange case of nationalising in order to privatise!

Sello Rasethaba, chairperson of the Lobbying Corporation of SA, has made an interesting contribution to the debate around nationalising the mines ("We should follow the Chinese route", City Press Business, 29 November). Rasethaba positions himself as a protagonist of nationalising mines in SA. His article, however, confirms and compounds the concerns that many of us in the ANC-alliance have about the timing and motivation behind at least some of the recent calls for nationalisation.

Rasethaba mentions, in passing, the SACP's recent interventions on this topic. He claims that "Jeremy Cronin" has said "many mines were now owned by struggling BEE groups, which meant that nationalisation would be little more than a bail-out at taxpayers' expense. I do not know where he [that's me] gets his evidence from, but he is wrong because the top 30 resources companies that control more than 90% of the sector are in white capital's hands and are controlled by foreigners."

There are two major confusions here. No-one has ever said that BEE groups are dominant in our mining sector. What has been said is that our mining sector in general has been hit by the global recession. BEE interests in mining tend to be particularly vulnerable precisely because many operate in marginal mines and because most of their share-holdings are highly geared. Moreover, some (not all) of our resource sectors are now in serious long-term decline. The obvious example is gold, where, despite the recent significant surge in the gold price, output has declined by 9%.

While, in principle, the SACP certainly supports the nationalisation of the commanding heights of our economy, any move to nationalise mines now needs to be closely scrutinised. Would nationalisation be the best allocation of billions of rands of public money in the current reality? Whose class interests would be served? Would we be baling out capital in general and not just BEE elements (although these latter might be particularly anxious to be bought out, given their high levels of indebtedness)? Would we be saddling the public sector (and therefore taxpayers) with the burden of managing down declining sectors, allowing those who have made trillions of rands of super-profits to walk away from responsibilities to workers, communities, and a ravaged environment plundered for over a century?

Then there is the other confusion embedded in what I have just quoted from Rasethaba: "the top 30 resources companies that control more than 90% of the sector are in white capital's hands and are controlled by foreigners." If these resources are controlled by "foreigners", then are they really in "white capital's hands"? Yes, I suppose, if you assume that "foreigners" are necessarily "white". So who are these foreigners? Well, of course, foreign holdings in the SA resources sector are diverse, typically cosmopolitan investment funds and multi-national corporations. In the interesting example that Rasetheba cites, the ASA Metals joint venture, it is a Chinese state-owned corporation that has a 60% controlling interest, while 40% is currently held by a provincial publicly-owned entity, Limpopo Economic Development Corporation (LimDev).

All of this illustrates that it is far too simplistic to divide capital into "white" and "black". (Is Chinese capital "yellow", and if it is state-owned is it then "red"?) I am not for a moment denying that we are living still with the terrible reality of racialised inequality and exclusion impacting upon the black majority of South Africans. In the SACP we are not colour-blind liberals. Our national democratic struggle is all about the radical eradication of national oppression AND the structural realities that still keep reproducing it. We fully support broad-based black economic empowerment (after all, it was the Communist Party that first pioneered this call in SA in the late 1920s).

But to make sense of different sectors and strata of capital, we need to analyse them in terms of their dynamic and functional realities. Is it capital that is largely dependent for its reproduction on productive investment, or on speculation, or on rent-seeking as a comprador go-between? Is it bound to a national market, not so much by sentiment, but by its location within the accumulation process, or is it cosmopolitan? Is it structurally parasitic on the state? Is it locked in by its indebtedness to others? We also need to distinguish between the agents of capital accumulation (owners and managers), with their various subjective political, cultural and ideological inclinations, and the underlying laws of capital accumulation (which ARE colour-blind).

Above all, we always need to ask what leverage the working class and other popular forces, together with our democratic state, have over different sectors and strata of capital and its agents in order to discipline them, as much as possible, into the transformative agenda we have highlighted above.

Unfortunately, Rasethaba's attempt to promote nationalisation asks none of these strategic questions. And he doesn't ask these questions for a very simple reason - he has a very different agenda.

Beneath the surface of his argument a strange paradox is apparent. He is in favour of public ownership of mining interests…but essentially as a route to then privatising much of them on behalf of aspirant black capitalists! He commends Limpopo's publicly-owned LimDev's endeavours "to sell 30% of its [minority] stake in ASA Metals…", and its "expression of interest for a BEE partner to buy 62,5% of its 40% stake" in the same company (I don't quite understand the arithmetic here, but nevermind). But he doesn't explain how any of this will contribute to job creation, or enhanced beneficiation.

He bewails the fact that the "state missed [an] opportunity to assist black mining entrepreneurs by not using the proceeds from the royalties legislation to fund new entrants". Again, he doesn't tell us how using public proceeds in this way would advance the transformation of our skewed, semi-colonial growth path. I am not saying that it wouldn't – but I am saying that we need to know how it would.

He calls on SA to "nationalise companies in strategic sectors" using the balance sheets of the state-owned African Exploration Mining and Finance Corporation, the IDC, PetroSA, the PIC, Eskom and Transnet. But to what end? He tells us that "these entities must expand into the African continent and eventually go global…" Again, he simply replicates the sub-imperial ambitions of Cecil Rhodes and all of his successors. Again he simply calls for the intensification of the same flawed growth path.

It is true that he qualifies himself by saying we must expand beyond our borders "while heeding the national interest and security of the republic and the welfare of South Africans". But what about our neighbours? What about Zambians or Mozambicans or Angolans? What about an entirely different kind of relationship of developmental solidarity between SA and its region?

The ironies of Rasethaba's intervention, where nationalisation is espoused to advance privatisation, are best explained by understanding that he consistently conflates South Africa's national interests with the sectoral interests of aspirant black capitalists. Emerging black capitalists may well be able to contribute to a multi-class national struggle to transform our society. But this will not happen spontaneously. They will need to be marshalled within the discipline of a common strategic objective of transforming the STRUCTURE of our economic growth path. And that is quite a different matter from simply changing the supposed "colour" of capital.


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