Corruption is a class project – Amandla 76 Editorial

by Jun 18, 2021Amandla

Corruption is a class project – Amandla 76 Editorial

Editorial | Amandla 76 | June 2021

The scandal surrounding the Health Minister is symptomatic of a terrible disease gripping South Africa. Literally, billions of rands are looted, not just by the predatory elite (a small collection of wannabe capitalists) but also by the “civilized” Sandton elites. Their combined efforts are laying waste to the economy.

The crisis

Covid-19 has laid bare the depth of the social, economic and political crises facing South Africa. No country or state can sustain a society where almost 50% of the work force is unemployed. Nor is it possible to talk of a united single nation where just 10% of the super-rich own 90% of the wealth. And no society can develop where a woman is raped on average every 25 seconds.

Billions of rands is lost to looting, price gouging and profit shifting. This is money that the state should be investing in social renewal, creating decent work and reindustrialising the economy for a low carbon future. For example,

  • Global Financial Integrity estimated South Africa lost just over $26 bn. through trade misinvoicing, transfer pricing, profit shifting and other forms of illicit financial outflows;
  • According to Kenneth Brown (SA’s former Chief Procurement Officer) in his 2016 report 40 percent of the government’s budget for goods and services was being consumed by inflated prices from suppliers, and fraud.
  • Davis Tax Commission conservatively estimated that SA loses at least R50 bn to corporate profit shifting annually;
  • Pravin Gordhan estimated that “state capture” between 2014 -2017 cost R250 bn.

Corruption and cronyism dominate the discussion of SA’s current political situation. So we need to understand their roots. They are the symptoms of the crisis of the project to create a black capitalist class without redistributing wealth in the form of assets as capital.

The reality of state capture

A predatory elite has increasingly taken control of the ANC and used it as a platform to influence state tender and procurement processes. This has been done from within the state at all levels, including state-owned enterprises. Hence the term “state capture”. This illustrates the linkages between capital and the state.

But instead of that being made clear, we get a story that it’s all about a bad faction of the ANC.

It is not something exclusive to Zuptas. It stretches from CEOs of state-owned corporations, to Director Generals, Chiefs, Headmen, ward councillors, and even trade union officials. All desperate to accumulate, in order to escape their Apartheid-defined circumstances.

A key focus for all components of the aspirant black capitalist class is the state procurement budget, worth +/- R900 bn. per year. It is to this procurement budget, and in particular the budgets of state-owned enterprises, that the organised network of predatory capital honed in on. And with Broederbond precision, they placed their people to facilitate access to the contracting process.

Civil war in the capitalist class

Even within the new black capitalist elite there are divisions. There are sections more dependent on the state for accumulation, and other sections more dependent on transnational capital. Hence the political differences between a Jimmy Manyi, on the one hand, and a Sipho Pityana or Cyril Ramaphosa, on the other.

Ramaphosa’s clean-up campaign against corruption, is convenient. It deals with his political opponents in the ANC. But it is riddled with contradictions. Some of his closest allies are deeply embroiled in corruption scandals. David Mabuza, his Deputy President, his close ally in the Eastern Cape Oscar Mabuyane and of course, Gwede Mantashe, Pule Mabe and now Zweli Mkhize.

The roots of this crisis lie in the failure of the state and the ruling elites to renew a strategy for accumulating wealth that was capable of sustained economic growth and rates of profit for capital. Instead, the post-Apartheid government attempted to reproduce the accumulation model of the Minerals-Energy Complex. At the same time it tried to engineer greater black ownership of the economy.

It has been a dismal failure. And it is the source of a class conflict inside the capitalist class. On the one hand there is an emerging black capitalist group hungry to secure ownership of the heights of the economy. On the other hand we have big business desperate to restore profitability in the face of global competition.

A dysfunctional state

This has coincided with a neoliberal hollowing out of the state. And this hollowed out state is what the so-called “predatory elite” depend on. This has made the state even more dysfunctional as its institutions have been perverted to serve their interests.

Using the state for accumulation has consequences. Provision of water and other services is contracted out to private companies, whether they have the expertise to provide the service or not. Outsourcing and sub-contracting become a major means of delivery of services and infrastructure development. This requires over-pricing and the cutting of corners to be profitable. And worse – neglect, and even sabotage and destruction of infrastructure, become a positive as they create opportunities for outsourcing, from which state officials can benefit.

And we are not short of examples: an estimated R57 bn needed to fix defective RDP houses.  Rand Water’s accusations that water tanker contractors are sabotaging water pipes. To name but two.

So rivalries within the capitalist class, rather than between capital and labour, are most significant in shaping the current political situation.

The consequences of this are not hard to see. Clover has announced recently that it is closing down the country’s largest cheese factory in Lichtenburg, North West, blaming water and power outages.  The company also struggled to use the road leading to the factory due to large potholes.

Likewise, Astral Foods, SA’s largest poultry company and a JSE listed company with a market capitalization of R6.6 bn. Astral was forced to take government to court to try to get a reliable supply of electricity and water to its Standerton operation. As the CEO of Sibanye Stillwater, Neil Froneman, complains: “It’s one of the reasons why foreign companies don’t want to come here, because they can see they’ll have to do what the government is supposed to do but isn’t doing. They’ll end up tarnished with social issues that they haven’t caused.”

Opportunities for accumulation

This dysfunctionality is not a random outcome of looting. It is intentional. For big business it justifies liberalisation and privatisation; for the predatory elite it provides accumulation opportunities.

Eskom is a case in point. On the one hand, its crisis is justifying the creation of a private electricity sector, worth billions of rands, through the Renewable Energy Independent Power Producers Procurement Programme. And then, as the crisis deepens, the opportunities for private accumulation multiply. Look at the R218 bn. for Karpowership. A 20-year deal to supply 1,220 megawatts of electricity from gas-burning power plants stationed on ships moored offshore. And of course there is the plundering of Eskom’s massive procurement budget, whether for Kusile and Medupi or to supply coal.

The same process is unfolding at Transnet and Prasa where billions were looted. And it has given rise to government’s plan to privatise part of the rail system and ports.

So where do we go from here?

As the fight between different sections of the ruling class intensifies, it is crucial to avoid false dichotomies: Ramaphosa good; Magashule bad. Neither faction of the ANC are friends of the workers and the poor. And as Ramaphosa gains the upper hand, leading to prosecutions against erstwhile comrades, this should not be seen as a renewal of the ANC.

Different factions of the ANC are differently implicated in looting and profiting through their political connections and proximity to the state. And all factions agree on austerity and some version of neoliberalism as appropriate economic and social policy. The workers and popular movement should take an attitude of a plague on both their houses.

It is imperative not to repeat the mistakes of Cosatu and the SACP, which chose Zuma against Mbeki. The politics of “my enemy’s enemy is my friend” is mistaken. It leads to disasters such as the 2008 Polokwane conference of the ANC.

The Alliance is dead as a progressive block. In spite of the challenges of rebuilding the mass movement on principles of working class independence, it is the only way for the workers and popular movement to recapture its relevance and renew itself. This will entail struggle on multiple fronts, not least corruption and state dysfunctionality.

The provision of decent social services, especially at local government level, is at the centre of the struggle against corruption, cronyism and state capture. And in this struggle, demands for in-sourcing and against privatisation will be important to unite workers in the labour movement with their sisters and brothers in working class communities.

The struggle against austerity, against wage cuts and retrenchments in the public sector, and the struggle against corruption are intimately linked. They provide the bridge for building the necessary worker / community alliance. To fight effectively against corruption, we have to join the struggle against austerity and neoliberalism.

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