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Jul 11, 2023

Inequality defines the nature of South Africa’s economy

There is a swelling consensus that the current order of things is not only

There is a swelling consensus that the current order of things is not only inhumane but unsustainable. South Africans are exhausted, frustrated and anxious. The yearning for change — for respite from this dysfunctional status quo where destitution and violence define daily life — is pervasive and palpable. Alternatives to political organisation and economic policy must be seriously contemplated.

Yet in the past 27 years, when moderate reforms and alternatives are brought forward, segments of civil society, corporate consultants, orthodox economists and some liberal and conservative commentators in major news outlets appear allergic to any deviation from the status quo.

Free higher education, a liveable wage, land redistribution, a universal basic income, decommodified access to basic services, a wealth tax on corporations and the ultra-rich — all have been condemned as impractical, morally unjustified and utopian.

What I offer is a brief assessment of the ideological assumptions that underpin the panic over attempts to redistribute wealth and thus power.

Mainstream political discourse is sometimes impaired by an inadequate understanding of power. It is an understanding of power that is often ahistorical, shallow in its reading of history, indifferent to global politics, idealistic and elitist. The cause of our socioeconomic plagues is placed almost exclusively on the disastrous governance of the ANC.

The misuse of state power has had disastrous consequences for millions. The ANC's failures, whether it be corruption, neglect of the poor or inability to implement its own developmental policies, have pushed the country towards calamity and collapse.

But the government is not the sole or central locus of power. Nor is it the only structure that abuses power at the expense of the country's vitality.

Is it not strange that in the most unequal society in the world, where most are jobless and poor, the role of our capitalist economy — the system that dictates the ownership, use, production and distribution of resources — is often omitted?

Worse, in the predominant analysis of South African capitalism, it is rendered an apolitical system of efficient and moral distribution, a means towards an end that can benefit all. One whose potential to boost economic growth and overcome poverty has been supposedly stifled by a state with socialist tendencies.

If one is armed with historical consciousness and the awareness that economic production is the primary force that informs political structures and social relations, it becomes clear that the cost of capitalism far exceeds its benefits.

Neoliberal capitalism has increased inequality and financial precarity, retained and expanded exploitative labour relations, stagnated wages, pushed multitudes into lifelong debt, intensified unemployment, ravaged the natural environment and severely weakened democracy by concentrating wealth in the hands of a few. This has unfolded with the collaboration of democratic governments such as the ANC.

But what is capitalism? Some are under the delusion that South Africa is a quasi-socialist state. Simply defined, capitalism is a system where production is privately owned by capitalists, who employ workers for paid wages and sell their produce on the market.

Capitalism is not static. It has developed and evolved, taking different shapes in various contexts over the past 400 years. Since the 1990s, capitalism, on a global level, has adopted a neoliberal face and form.

Author David Harvey offers a useful definition of neoliberalism that provides insight into how South Africa has devolved into crisis 27 years after the ANC compromised on property relations and economic production, by adopting a neoliberal framework for macroeconomic policy.

Neoliberalism, Harvey writes, is "a political project to re-establish the conditions for capital accumulation and to restore the power of economic elites". Deregulation, privatisation, the commodification of social provision or the withdrawal of the state from the social provision, labour flexibility and trade liberalisation are its key instruments.

Inequality in South Africa is more than just the result of apartheid's legacy and the ANC's blunders. Inequality is a fundamental feature of capitalism, built into how the system operates and sustained through dispossession, exploitation and coercive measures employed by the state on behalf of capitalists. By seizing resources and privatising the means of producing goods and services, inequality is cemented between capitalists and society, which becomes dependent on their enterprise.

This dispossession is rarely a peaceful process. In South Africa, the establishment of capitalism required the dismantling of African polities and the violent seizure of livestock and land. The Enclosures of 18th and 19th century England, which privatised land once held in common by peasants, was a brutal and bloody affair.

This violent dispossession continues today, where one sees people in the Global South displaced and their lives disrupted by commercial property developments, industrial expansion and environmental degradation.

To survive — now that essential goods are commodified — people must sell their labour for a wage. Capitalism relies on inequality between employers and employees; they are not equals looking for a mutually beneficial relationship.

A capitalist sits on a mountain of wealth and the first concern is with the ability to compete in the market. Such an ambition comes with its costs and one of those is labour.

An employee is dependent on the capitalist for survival. This allows capitalists to set the terms of employment and use their position as leverage in regards to working conditions, working hours, benefits, and insurance. Capitalists seek to increase productivity and minimise the cost of labour to enhance their competitiveness.

Because of the private ownership of economic production, capitalists are legally entitled to seize the majority of wealth, which results from collective work and collaboration, not rich men working incredibly hard. In other words, even though chief executives do not participate in the labour of producing goods and services, their ownership of capital results in them earning 351 times more than the average worker, according to the Economic Policy Institute.

Historically, as capitalists compound their wealth, inequality expands because wealth translates into political power, which can then be used to mould society to further accommodate the interests of capitalists. This is done through lobbying, capturing media houses to influence public opinion, threatening capital flight, suppressing labour movements and funding political campaigns.

It is a dangerous cycle, a founding principle for the concentration of wealth and power, according to the US author Noam Chomsky.

How have these dynamics unfolded in post-apartheid South Africa? The transition to democracy presented an opportunity to correct the inequalities at the heart of our economy. Using their leverage (primarily the threat of capital flight) and taking advantage of the ANC's weakening resolve, capitalists in uneasy collaboration with the National Party were able to strengthen their position.

In relation to workers, this has meant an increase in the casualisation of work, a local and global phenomenon in which employers, seeking to cut down costs, employ on a short-term basis, thereby evading supplying employment insurance, paid leave and other conditions of labour. Moreover, the casualisation of work has meant workers are increasingly alienated from one another, diluting union membership, rendering many vulnerable to their employees.

Outside the zone of casual work, the department of labour's failure to oversee compliance with labour law has allowed capitalists to continue with exploitative practices in industries such as agriculture, construction, manufacturing, hospitality and retail. In 2007, 28% of workers in the agricultural industry were paid below the minimum wage and 36% did not have contracts. Corporate executives report earning multimillion-dollar salaries, but wages for workers have stagnated over the past six years.

The result of capital's dominance is not only inequality but poverty. Low wages, long hours or precarious work, minimal or no benefits, gathering debt to survive and weak union leadership in a context of the rising cost of living (and a state that often fails to deliver basic services), means workers remain trapped in destitution.

South Africa has a large pool of cheap labour, mostly unguarded by unions and often not protected by regulations, yet it appears capital is reluctant to invest and stimulate job growth, instead preferring to accumulate through financial activities and continuing to propel de-industrialisation, shedding jobs in industries such as manufacturing.

A universal basic income, a wealth tax or land redistribution — these are tools that could alleviate the suffering millions endure.

To think we can correct this country's course without redistributing wealth or power is delusional. Until we reconsider property relations, economic production and wealth distribution, South Africa will continue to collapse.

Andile Zulu writes regularly for the Mail & Guardian from Durban.

The views expressed are those of the author and do not necessarily reflect the official policy or position of the Mail & Guardian.

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