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Country analysis > South Africa Last update: 2020-11-27  

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Socio-economic transformation-progress or regression?

1. Socio-economic transformation-progress or regression?

We are now less than a year-and-a-half away from completing the first decade of democracy in South Africa. We are justifiably proud of the gains made in democratisation and in the consolidation of political peace and stability. But what about socio-economic transformation? Are we on the right track? Have we begun to make an impact on the dismal apartheid legacy of racialised poverty and inequality?

The answer is both yes and no. In some respects we are beginning to make a significant impact, in other respects poverty and inequality have worsened.

In mid-November the government agency, Statistics South Africa, released a major report comparing household earnings and spending for October 1995 and October 2000 ("Earnings and spending in South Africa: Selected findings and comparisons from the income and expenditure surveys of October 1995 and October 2000").

The Report finds that, in terms of income, the average South African household became significantly poorer between 1995 and 2000. In October 1995 the average household's income was R37,000. When inflation is taken into account, the value for 2000 was projected to be R51,000 if average income were to remain constant. But the survey found the actual average income for 2000, at R45,000, was well below that.

1.1 Deepening income inequality
These are average figures. When households are divided into five bundles, each representing 20% (or "quintiles"), ranging from the poorest to the richest 20%, then an even more sobering picture emerges. In 1995 the poorest 20% of households received a mere 1,9% of the total income in our country. In 2000 this pitiful share had dropped still further to 1,6% of total income. But the slipping back in share is not only confined to the bottom 20% of households. The poorest 50% of South African households also slipped backwards in these five years relative to the richer half.

1.2 Racialised inequality
Perhaps the most depressing statistic to emerge from the mid-November Stats SA report is that the average African household experienced a 19% fall in income, while the average white household experienced a 15% increase!

In 1995 the average white household earned four times as much as its average African counterpart. In 2000 the average white household was now earning six times the average African household.

In its 1995 survey of household earnings and spending, the Central Statistical Office (as Stats SA was then known) warned that income was distributed "in a highly unequal manner", and that in this respect SA was comparable to the other most unequal countries in the world, like Brazil and Ecuador. It also noted the obvious, in SA this inequality was not only racialised, but also gendered and geographical-households headed by African women and rural households were the poorest. The 2000 survey shows that little has changed, the same basic patterns persist. Income and expenditure are still distributed "in a highly unequal manner", with race, gender and geography being strong determinants.

1.3 Deepening class exploitation
But when it comes to class, deepening inequality is even more stark. According to the recently released statistics for the second quarter of this year, operating profits (accruing basically to a small minority of capitalists and the corporations they control) exceeded the entire wage bill going to labour as a proportion of our GDP!

Ann Crotty, Business Report correspondent observes bitterly:
    "For those who had any doubts, the figures provide unassailable proof that ANC policies have been much more supportive of capital than labour…You have to go back 21 years to find another period in which capital did as well. That was in 1981 when, for reasons quite beyond the control of any South Africans, the gold price shot up to $800 an ounce…The situation in 2002 is entirely different. It represents the success of policies designed to achieve such a result. The return on capital has been significantly enhanced while the return to labour has been mercilessly squeezed. In real terms labour costs in South Africa have fallen exceptionally fast in the last decade, which is why our productivity has recorded the fifth biggest increase of the 46 largest economies in the world." ("Capital makes a mint as labour takes the knock", Business Report, November 20, 2002).

Taken all together, we believe that these statistics indicate that, despite our best intentions and expectations, our present accumulation path remains stubbornly dominated by patterns of growth and simultaneous under-development typical of a semi-peripheral capitalist economy. We have not succeeded (nor is it easy to succeed) in breaking out of the apartheid-era accumulation path.

1.4 The social wage
Does this mean that everything is getting worse? That all government socio-economic policies are failing to redress the apartheid legacy? The answer is no.

The Stats SA report comparing households for 1995 and 2000 shows very significant progress in the impact of "social" wage measures-things people get for free or at subsidised rates, such as basic services, health care and schooling.

The proportion of people with access to clean water climbed from 79% to 83%. Those with access to electricity for lighting rose from 64% to 72%. Those with access to telephones rose from 29% to 35%. People living in formal housing rose from 66% to 73%.

So why are we succeeding on some fronts, and failing on others?

1.5 The lessons are very clear-"the political economy of labour versus the political economy of        property"
Back in 1864, Marx warmly celebrated what were, on the face of it, relatively modest reforms of the dominant capitalist system in Britain at the time-the passing of the Ten Hours Bill, and the building of a workers co-operative movement. These measures had their own inherent, short-term value, but they also imposed, Marx argued, a different, an anti-systemic, a potentially transformational logic onto the dominant accumulation path. He writes of the passage of the Ten Hours Bill:

    "besides its practical import, there was something else to exalt the marvellous success of this working men's measure…it was the first time that in broad daylight the political economy of the middle class succumbed to the political economy of the working class."

In similar terms, Marx celebrates the building of a workers cooperative movement as a
    "still greater victory of the political economy of labour over the political economy of property."

Here in South Africa the statistics are telling us that where we are simply going with the flow of capitalism ("the political economy of property"), seeking to create an investor friendly climate, we are singularly failing to address the apartheid socio-economic legacy-the emergent bourgeoisie emerges, the established rich get richer, the great majority suffer worsening income poverty and inequality.

On the other hand, where we have tried, even if unevenly, to defend and consolidate the public sector (education and health); where we have, at least until recently, held on to key parastatals and provided them with a relatively clear developmental mandate (electricity and telecommunications); where we have rolled back, to some extent, the capitalist "user- pays" market principle (water and electricity); where we have strategically intervened into the capitalist market with active subsidy policies (housing)-in these cases we have had a tangible transformational impact on the apartheid socio-economic legacy.

Marx put it very well back in 1847:
    "The theoreticians of the proletarian class…no longer need to seek science in their minds; they have only to take note of what is happening before their eyes and become its mouthpiece."

Where we have muddled along between these two different strategic approaches, between the "political economy of property" and the "political economy of labour", as in transport, neither privatising whole-sale, nor putting in serious infrastructural or subsidy investments, there has been a slow deterioration. We are going backwards, forwards and side-ways simultaneously.

There are also other important areas where there are arguably positive lessons to be learnt. For instance, without necessarily imposing an alternative "political economy" logic, where we have provided active, industrial sector policies and fostered a collective social-accord buy-in (notably in the auto- and auto-components sector) then actual export-led growth and some job retention and skill training and development has occurred.

1.6 Perhaps things have improved since October 2000?
We have been relying essentially on statistics that take us up to October 2000. Some comrades may argue that since then there has been a turn-around, or that deepening poverty, unemployment and inequality have bottomed-out, and that in the relative short-term we should see a significant take-off. We have, of course, been promised an imminent take-off ever since mid-1996. However, we should not just rule out these alternative views.

In the second quarter of 2002 there were indications that job losses had, indeed, bottomed-out (at a very high level of unemployment, approaching 40%). However, the Department of Trade and Industry economists who noted this development were not predicting a sustained bottoming-out, unfortunately. With an annual GDP growth for this year at around 3%, South Africa is one of the better performing economies globally. This is certainly something to acknowledge, and it is, no doubt related, in part, to the "stabilisation" of key macro factors, and the partial "insulation" they have given us. However our relatively better performance is more a reflection of a major global down-turn, than an indication that we are performing radically better than in previous years. Growth, of course, is no guarantee of lessening poverty or inequality, and by common accord the current 2-3% levels are in any case entirely inadequate to make a significant dent in our developmental and unemployment deficits.

1.7 The gains themselves are threatened
Even more pertinent and concerning is the fact that in a mixed economy dominated by capitalism (the "political economy of property"), the gains made through imposing an alternative logic (the "political economy of labour") are never secure and are always threatened by roll-back. We have, in fact, to boldly press ahead with an accumulation of transformational measures, or the advances will themselves be engulfed and turned around.

We have made head-way with overcoming resource poverty and inequality, while losing ground on the front of income poverty and inequality. However, income and resources are interconnected, especially when services are increasingly commercialised or privatised. Gains made with overcoming resource poverty can be undermined by income poverty. There is strong evidence to suggest that this is the case with telecommunications, for instance.

Guided by its public sector developmental mandate, and assisted by its temporary fixed line monopoly, Telkom has rolled out an impressive 2,67 million new lines, many to poor communities. However, addressing the telecommunications resource back-log has been conceptualised largely as an interim measure-the roll-out of infrastructure. The sustainability of this developmental measure has clearly not been adequately strategised. Sadly, as Telkom's own 2001-2 financial statement was forced to concede, only 667,039 of the 2,67 million lines delivered were still in service. Over two million lines delivered have been cut-off because the poor communities to which they had been delivered could not pay for the service. This was related to general income poverty, but also to the contradictory restructuring trajectory of Telkom. Getting ready for its own further privatisation and for competition on the fixed-line market, Telkom has brought down the cost of international calls, in the niche market where it is likely to face most competition. However, in the mass domestic market, where there will be little competition, Telkom has hiked up call prices far in excess of inflation. The privatisation and liberalisation objectives of making Telkom more sellable and more competitive, and the developmental objective of sustainable services to the millions of poor in our country have simply collided head-on. The privatisation/liberalisation agenda has won against the developmental agenda.

It will be informative to see what the October 2002 household statistics tell us about telephones. It is probable that some of the cut-offs noted above will be partially compensated by increased cell-phone usage. It is unlikely, however, that more costly cell-phones will completely make up for the 2 million cut fixed lines. Either way, it is clear that the sustainability of a progressive measure, the mass roll-out of telephone fixed line infrastructure, was not adequately thought through, and was not adequately aligned with other policy measures. At the very least, significant public resources have been ploughed into 2 million unsustainable phone line connections.

We suggest that on many other fronts-housing, education, health-care-progressive advances are constantly threatened by income poverty, by policy incoherence, and by the absorption of resources (including human resources) into parallel (and even sometimes foreign) private sectors.

We have no choice-we have to push boldly ahead with ongoing transformational measures that address both resource and income poverty and inequality. There is no short-cut within the National Democratic Revolution, no short-term roll-outs, no simple "market correction", no quick corrective measures that will "normalise" and "de-racialise" our reality.

Unless we deal with class realities within our NDR we will not be able to resolve the national question itself. It is our considered view that both the new phase of imperialism, and the stark challenges posed by the statistical indicators of persisting inequality and poverty, underline the salience of the general strategic positioning the SACP has adopted over the last decade. In supporting the NDR, in identifying the NDR as the dominant task of our present reality, we have also insisted on the validity (and necessity) of independent socialist theory AND independent class-based socialist organisation and mobilisation. Without a systematic socialist approach as a significant current within the NDR, we are doomed to reproducing our marginal, semi-peripheral global status, and to reproducing extreme race and class poverty and inequality.

It is for all the above reasons that the SACP welcomes the commitment by government to hold the Growth and Development Summit during the first half of 2003.

The SACP cannot over-emphasise the centrality of a growth and development strategy in addressing the massive challenges we face. It is important that as we approach the Growth and Development Summit the ANC-SACP-COSATU Alliance reaches extensive consensus and agreement. This will ensure that we approach and engage with and against private capital as a united people's voice.

Where there are trade-offs, they should be not be premised on the current accumulation path, where only the working class is expected to make sacrifices. This should include the review of the very so-called "fundamentals" so that we do not approach this crucial Summit from narrow trenches.

The Growth and Development Summit must not suffer the same fate suffered by the 1998 Presidential Jobs Summit. Concrete and binding agreements and commitments from all sides-labour, community, government and capital-must be reached with clear goals, targets, and workable implementation and monitoring mechanisms.

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