[Marxism] Zuma and international finance

[Patrick Bond]

Noah, since your analysis of the ANC conference is spreading around (to 
sites like PanAfrican NewsWire and the marxism listserve), let me 
address a rebuttal to you, and see if you have anywhere to record it on 
your site. In relation to my suggestion that Jacob Zuma not suck up to 
Citibank and Merrill Lynch, you argue:

"This criticism is naive in the extreme. Firstly, on the tactical level: 
Jacob Zuma is still far from becoming the leader of his country, and the 
big investment banks have the capacity to exert considerable pressure on 
South Africa, for instance by destabilising its economy, in order to 
seek to prevent Zuma from taking up office as president. The facts in 
Professor Bond's paragraph are accurate, and ably demonstrate the 
destructive power which the international financiers have at their 
disposal. While ANC leader but not yet South Africa's president, Zuma 
would not be in a position to manage the country's response to such 
attacks. Secondly, strategically: even were one to assume that the 
correct socialist strategy for a medium-developed Third World country is 
the immediate nationalisation of all economic activity (a most 
questionable assumption in present global conditions), South Africa 
would still need a relationship with the transnational companies, 
including the banks, in order to be able to trade and to attract 
technology."

I've written two books (Against Global Apartheid in 2001/2003 and Talk 
Left Walk Right in 2004/2006) discussing what were the *actual* power 
constraints and policy options linking SA to international finance, 
based in part upon working in Mandela's office twice when a) apartheid 
debt repudiation was under discussion (mid-2004); and b) during the 
first major run on the SA currency (early 2006). I have not had any 
critique of the books or related articles as 'naive', you're the first.

The arguments in the books - which I'm happy to email you or anyone who 
wants them (pbond at mail.ngo.za) - endorse the cases of Malaysia in 
September 1998 (exchange controls) and Argentina in 2002 (default), as 
examples of strong, feasible action against international financiers, 
taken to protect the local economy. Were those rulers (by no means 
leftists) naive in the extreme, or did their tactics work? Even Joe 
Stiglitz confirms they worked well.

The whole point of my recent articles on the ANC succession is that the 
left - local and global - should have no illusions: Zuma is simply not 
going to say anything cheeky, much less advocate or take any kind of 
policy action against the interests of international financiers, even 
though SA has been smashed four times (1996, 1998, 2001 and 2006) by 
international financial runs, and now faces an 8% of GDP balance of 
payments deficit in part because of profit/dividend outflows to London 
in the wake of financial liberalisation. And those currency crashes (all 
above 25% in a matter of weeks) happened while SA was following 
bourgeois financial policies, such as high interest rates, liberalised 
currency, shrinking fiscal deficit, commitment to privatisation, etc 
etc. (The closest he will come is to allow a debate to occur, briefly, 
about whether SA should have interest rates in the 15% range.)

And I'm not sure where you've read that I or anyone in SA or anywhere 
else advocates 'the immediate nationalisation of all economic activity' 
- frankly you are simply generating a straw man.

It's not that your ideas are conservate in the extreme that galls most; 
it's your failure to consider the issue with care that socialists need 
to apply, especially when global financial markets warrant a sharp and 
sustained critique.

Cheers,
Patrick
http://www.ukzn.ac.za/ccs

***

http://21stcenturysocialism.com/article/arrow_in_the_wind_01587.html


  Arrow in the wind

The decisions at the ANC's Polokwane Conference, including the election 
of Jacob Zuma, have increased the likelihood, not merely the 
possibility, of a better world.

Jacob Zuma's accession to the post of President of South Africa is by no 
means a done deal. If the Scorpions 
<http://www.mg.co.za/articlepage.aspx?area=/breaking_news/breaking_news__national/&articleid=327815&referrer=RSS> 
get their way, by 2009 Zuma could be taking up residence in the 
Qalakabusha Prison rather than in Pretoria's Union Building. And even if 
Zuma does become South Africa's head of state, it is by no means clear 
that this would lead to a radical change in the course of the country's 
capitalist economy- a course which has further enriched the white elite, 
and created a new wealthy black elite, while leaving millions in abject 
poverty.

But whatever eventually flows from it, the fact of Zuma's election, 
together with the other candidates supported by the trade unions and the 
communists, to the leadership of the African National Congress, is a 
matter of significance to the world, not just to South Africa.

The clean-sweep change of leadership within South Africa's ruling party 
is the organisational expression of a change of understanding and a 
change of mood. The cruel myth of 'trickle-down' has already been 
exposed, and it is no longer controversial to observe that 
neo-liberalism delivers only misery to the majority of the people. Yet 
neo-liberal policies have been tolerated, even in South Africa where the 
political representatives of the mass of the people hold state power, 
because these policies have been seen as essential for national economic 
survival in our globalised world. The way that the 4,000 delegates at 
the ANC's conference at Polokwane voted signifies a further shift. Among 
the activists there is no longer merely a view that neo-liberalism is 
bad, but a feeling that something can be done about it.

The factors behind this shift include changes taking place 
internationally. Zwelinzima Vavi, the leader of South Africa's trade 
union federation COSATU, used his speech 
<http://groups.google.com/group/COSATU-press/browse_thread/thread/8ad121d5ca817892> 
at a Communist Party rally in October 2007 to point out that socialist 
forces are regaining the initiative. As he declared:

    When many have declared socialism dead, it is appropriate to mark
    the 90th Anniversary of the Russian Revolution and re-instil
    confidence in the future of socialism. This rally takes place amid
    rising working class confidence in South Africa and the world,
    especially in Latin America.

    The collapse of the Soviet Bloc in the later 1980s led to a
    triumphalist imperialist camp and some of their ideologues claimed
    the end of history. Today as we meet in this rally the
    overconfidence of neo-liberal globalisation has been challenged both
    by peoples' struggles and the failure of the system to resolve class
    contradictions and humanity's basic problems. We are therefore at an
    important and opportune juncture to pursue the struggle for social
    transformation to greater height.

After giving a positive assessment of the achievements of the socialist 
countries in the 20th Century, Vavi contrasted that record with the 
failure of capitalism to deliver on its promises:

    The collapse of the Soviet Union in the late 80s we were told was a
    poignant statement of the infeasibility and undesirability of
    socialism. Globalisation we were promised will herald a new era of
    prosperity for all. The new liberal dogma was unleashed on the
    people of the world and with more vigour and cynicism in the former
    Soviet republics. Capitalism was re introduced overnight without due
    regard to the social political and economic context of the former
    Soviet republics. This resulted in a Mafia - style privatisation of
    state owned enterprises and the tearing down of the social welfare
    system.

    What is the record since then? Capitalism remains a crisis-ridden
    system based on profit for a few. The divisions between the rich and
    the poor have widened both within and between nations...

    Mass impoverishment has become the order of the day as Neo
    liberalism has shattered social welfare systems and destroyed the
    public sector in many developing countries. Simultaneous with the
    restructuring of the working class, profits have soared for local
    and international bourgeoisie. In short mass impoverishment coexists
    with high levels of profit.

Vavi was explicit in his analysis that the struggles in South Africa are 
part of a global contest:

    Neo liberalism has been challenged throughout the world and more
    forcefully in Latin America. In this context we salute the wave of
    left wing-parties coming to power in Latin America, part of that
    wave of global challenge to neo liberalism. The South African
    working class has also forcefully challenged the neo liberal dogma...

    What are the implications for the South African Revolution? We must
    see our struggles as interlinked with the global struggle against
    neo liberal globalisation. Our challenge is to radicalise the
    current path of the National Democratic Revolution. This means
    building the power and the confidence of the working class to
    challenge the hegemony of capital. That requires a reversal of the
    flirtation with the neo liberal dogma by the democratic government.

Concluding his speech, the COSATU leader called on African National 
Congress members to mobilise to elect Jacob Zuma as ANC president. In 
this, he and his allies were successful. Whether the ANC under its new 
leadership will or can alter the direction of the country's development 
to benefit the poor and the working class is another matter. Critics who 
pour scorn on the idea that such change is likely have focussed on the 
assurances which Zuma has given to big business. Professor Patrick Bond 
of the Centre for Civil Society remarked 
<http://www.ukzn.ac.za/ccs/default.asp?2,40,5,1482> on 21st December:

    In his first speech to the ANC as president, Zuma himself intoned
    that there was “no reason why the business or international
    community or any other sector should be uneasy.” Quite so; after
    all, a mealy-mouthed Zuma made this clear last month in closed-door
    meetings organised by officials of two New York banks, Citi and
    Merrill Lynch, which are themselves making the world markets rather
    uneasy with their financial shenanigans.

In Professor Bond's opinion 
<http://www.ukzn.ac.za/ccs/default.asp?2,40,5,1480>, Zuma should instead 
have "address[ed] these bastards as follows":

    'You international financiers have wreaked havoc on the South for
    more than three decades: with your loans to dictators like the
    apartheid regime, with your Third World Debt Crisis from the early
    1980s which completely wiped out our 1960s-70s socio-economic
    progress, with your Emerging Markets crises starting in Mexico in
    1994 and continuing across the world, including destruction of
    post-apartheid SA's currency on four occasions, and now, with your
    Subprime Mortgage gambles which suckered African-Americans and other
    low-income people into the US real estate bubble leaving them to now
    suffer wealth shrinkage more severe than at any other time in modern
    history - at the same time threatening the safety of the world
    financial system.

    'Your two institutions had to fire your CEOs Stan O'Neal and Charles
    Prince for incompetence and write off more than $20 billion in bad
    investments. And you're telling me I must dance to your tune, to
    calm your goddamn jitters? Actually, you should calm OUR jitters!'

This criticism is naive in the extreme. Firstly, on the tactical level: 
Jacob Zuma is still far from becoming the leader of his country, and the 
big investment banks have the capacity to exert considerable pressure on 
South Africa, for instance by destabilising its economy, in order to 
seek to prevent Zuma from taking up office as president. The facts in 
Professor Bond's paragraph are accurate, and ably demonstrate the 
destructive power which the international financiers have at their 
disposal. While ANC leader but not yet South Africa's president, Zuma 
would not be in a position to manage the country's response to such attacks.

Secondly, strategically: even were one to assume that the correct 
socialist strategy for a medium-developed Third World country is the 
immediate nationalisation of all economic activity (a most questionable 
assumption in present global conditions), South Africa would still need 
a relationship with the transnational companies, including the banks, in 
order to be able to trade and to attract technology.

One of the most disastrous consequences of the collapse of the USSR is 
that, almost without exception, all international trade, all 
international finance, all international investment, and all 
international technology transfer now takes place on a capitalist basis. 
The challenge facing any country wishing to develop in a socialist 
direction- or even, as in the case of Cuba, to retain its socialism 
while developing its economy- is how to successfully engage with global 
capitalism while seeking to change the system.

Nevertheless, South Africa does have prospects in the present context. 
Venezuela and some other Latin American countries are demonstrating that 
it is possible to take some, at this stage very slow and limited, steps 
towards socialism. A new factor of great help is the rise of China as a 
trading power and potential investment partner, which reduces- but does 
not remove- the ability of the USA to impose its will on other nations. 
There are respects in which South Africa is well placed to take, and 
further, to lead, a move away from rampant capitalism. It is, both 
economically and politically, the leading nation in its continent.

The country's political structure gives it a further advantage. The 
overwhelming public support enjoyed by the ANC, the genuine mass 
involvement in the organisation, and the high level of political 
consciousness of its activists give South Africa some of the advantages 
of a one-party state without any of the disadvantages which occur 
through the banning of opposition parties. Further, not only is the ANC 
in an alliance with the Communist Party (SACP) and COSATU, the trade 
union federation, but these organisations are highly influential within 
the African National Congress itself. In his closing speech 
<http://www.anc.org.za/show.php?doc=ancdocs/history/zuma/2007/jz1220.html> 
to the Congress at Polokwane on 20th December, Jacob Zuma reaffirmed 
this relationship:

    Comrades, this conference has also reaffirmed the need for the
    continued existence of our Tripartite Alliance. This proves the
    correctness of the statement made by Inkosi Albert Luthuli when he
    said that the ANC is the shield and SACTU [the previous trade union
    federation] the spear.

    This is the nature of the ANC-SACP-COSATU Alliance relationship.
    This alliance is based on mutual trust and respect and should be
    defended and protected by all ANC members. Coming out of this
    conference we have a clear mandate to build and strengthen the
    alliance, to nurture it and defend it.

In his greetings to fraternal political parties, Zuma mentioned by name 
only one organisation outside Southern Africa- the Communist Party of Cuba.

The new leader of the ANC described the outcome of the conference as 
having "historical significance". The extent to which this is true 
remains to be seen. But at the very least, the decisions at Polokwane 
have somewhat increased the likelihood, not merely the possibility, of a 
better world.