To the man who said to me this week that he does not find it helpful to talk about ‘communists’, my reply was: I am afraid you are going to have to learn to.
As the full extent of the horror show that is the Cabinet becomes apparent and, with it, the understanding that the ANC is serious about prescribed assets, expropriation without compensation, and money printing, my colleagues and I have this week been bombarded with the question, ‘Why?’ Why are they doing this? Can they not see? Do they not understand?
Our answer is that ‘they’ – to mean the ANC in government – understand very well and are doing ‘it’ – to mean asset plundering – because they perceive it to be the most pragmatic option if they are to preserve their guiding ideology.
The ANC understands a few things very well. One is that the economy is failing and that the policies of the party and the government it leads cannot reverse that. A second is that, as the economy begins to fail faster, the government will run out of money. So what is it to do?
Taxing more is tempting but, beyond recourses to sugar and carbon taxes and the like, any further hikes (and there will be some) are unlikely to offer up much revenue as the law of diminishing returns plays out.
Borrowing the money is not an option either as loans come with conditions that will see the party surrender policy sovereignty. Accept the required level of bailout and your budget speech will be written in Brussels, Washington, or Beijing.
Growing the economy to earn the requisite revenue is off the table, too, as doing so would require liberalising reforms which are at odds with the revolutionary ideology of the party (see more below), given that such reforms would see the state surrender the power to direct the economy to individuals and the private sector.
The fourth option, and the final one, is to take the money. You can do this via a combination of money printing, prescribed assets, and regulatory mechanisms forcing firms to hand over equity to political cadres or what are euphemistically called ‘empowerment partners’. Carefully managed, the first three scenarios can create the illusion, perhaps for years, that the economy is hobbling along just enough to suggest that it might one day recover.
There is very little disagreement in the ANC over the fourth option. Ace Magashule, representing the Zuma camp, is not at odds on the principle with Ebrahim Patel, for example, of the Ramaphosa camp. What disagreement there is in the party is essentially between those who want to use the fourth option in order to loot the proceeds and those who want to use it to build a great socialist utopia. What little opposition there is in principle to the fourth option will be pensioned off or retired in the coming years.
Mr Ramaphosa is standing strongly against such proposals though, surely?
That is the impression created in the media and by analysts. Take this comment published by Old Mutual this week:
‘Unfortunately, the announcement that the ANC wants to expand the SA Reserve Bank’s mandate to focus on growth and inflation and that it wants to study “quantity easing” (presumably quantitative easing, or QE) muddied rather than clarified the waters. The announcement, which needs to be seen in the context of the ruling party’s internal political battles, was later refuted by the finance minister (a former Reserve Bank governor and staunch defender of its independence) and President Cyril Ramaphosa.’
Some newspapers went as far as to report that Mr Ramaphosa had put his foot down against central bank nationalisation. He was dead set against it.
Except that he isn’t. This is what he said last week: ‘It is our desire for the SA Reserve Bank to be publicly owned. However, we recognise that this will come at a cost, which given out current economic and fiscal situation, is simply not prudent.’ In other words, it’s a question of when not if.
Why is the ANC united around such plainly hopeless ideas?
The reason is that the party subscribes to the ideology of National Democratic Revolution or NDR. The ideology is based on Lenin’s theory of imperialism, which held that the wealth of the colonial powers arose solely from their oppression and exploitation of the colonised. From this foundation, Lenin argued that the purpose of anti-colonial revolutions must always be to empower the state to direct the economy and thereby dispossess the coloniser – and then embrace communism – failing which the colonised could never be free. The communist party made the ideology uniquely applicable to South Africa by developing the notion of ‘colonialism of a special type’ – to mean that both the coloniser and the colonised lived together inside the same country, into which the coloniser had become permanently integrated. But despite that integration, white/capitalist prosperity remained solely the result of the oppression and exploitation of the black majority, and indeed prolonged that poverty. The ANC has annually recommitted itself to the NDR, right up to this year, and all its recent action on policy – from expropriation and prescribed assets to money printing – is down-the-line NDR theory in practice.
Incredibly, given the evidence at hand, we are still asked if the NDR is a real thing. Of course it is real. It is the dominant subject of party conferences and speeches. Papers are drafted on how best to achieve it and debates on how to execute it. The incredible thing is that the ANC can state that the NDR is its guiding ideology, it can debate at length and in the public glare the best means to pursue it, and can then propose policies in line with that ideology and still you get observers who say they don’t believe the ANC really means it. Add a Cabinet in which communists control the bulk of the economic posts (labour, trade and industry, science and technology, and the deputy finance ministry) and the picture is complete.
To the man who said to me this week that he does not find it helpful to talk about ‘communists’, my reply was: I am afraid you are going to have to learn to. The ruling party is inspired by a communist ideology. That ideology has led to communist policies. Actual communists who belong to the communist party have been deployed to the Cabinet to implement those policies. By refusing to talk about communism, I am afraid that you are going to find it very difficult to understand what is going on.
There is no magic to this analysis. There are no special storehouses of insight to which only IRR analysts have access. Our analysis flows from reading the stated policies of the ruling party and the government, observing the people appointed to implement those policies, and surveying the economic and social results. It could not be more straightforward, yet, in plain sight, very few can or will see it.
Frans Cronje is the CEO of the Institute of Race Relations
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