Austerity and the lack of a real alternatve

Posted on February 24, 2019

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Austerity. That’s the name for the economic strategy employed by governments around the world as they make ever more futile attempts to stave off the domestic effects of the ongoing global crisis.

It amounts to a set of policies that protect the wealth of the few at the expense of greater hardship for the many. South African finance minister Tito Mboweni’s maiden Budget, delivered last week, fits this bill exactly, so it is no surprise that the labour movement has generally disparaged it.

The SA Federation of Trade Unions (Saftu), having broken with the governing ANC-alliance, was understandably caustic, describing the Budget as “a savage attack on the workers and the poor”. But even that usually loyal government ally, Cosatu, expressed disappointment, maintaining that Mboweni had “failed to rise to the occasion”.

Of major concern to the unions and to human rights groups is the fact that the few additional welfare crumbs provided by the Budget will be more than paid for by the increase in fuel taxes that will have a knock-on effect throughout the economy. The cost of living for the majority, whose greatest expenses are on food and transport, will more than devour the marginal increases in grants.

This justifies the comment made by Cosatu when the federation listed its pre-Budget expectations: “Workers are tired of seeing their hard earned taxes treated like petty cash.” Cosatu also wanted “no further anti-worker tax hikes”.

What was missing in the run-up to the 2019 Budget was what had become, in previous years, regular and often well constructed: “People’s Budget” contributions from unions and non-governmental groups. These provided possible alternatives to the liberal trajectory embarked on solidly since 1996.

Saftu, in a pre-Budget statement, did demand a “people’s budget”. But it was extremely skimpy on detail, calling only for more taxes on the rich, reversing social expenditure cuts and increasing spending on public services and “job-creating initiatives”.

The unions in particular have failed to rise to the occasion in not presenting cogent alternatives instead of highlighting the obvious ills, blunders and corruption while reacting in knee-jerk fashion to job loss threats. Such behaviour can amount to futile exercises along the lines of that rhyme about the “famous Duke of York” who “marched his men to the top of the hill and marched them down again”.

Yet perhaps the greatest danger facing the union movement is the prospect of being co-opted, supposedly as an equal partner, into a “social compact”. Already, many unions, mainly affiliates of Cosatu, are linked, through investment companies, to the system they blame for the woes of the workers.

As the SA Communist Party noted, three years ago, about such companies: “Sadly, they have often become entry points through which the capitalist class has inserted its DNA into the head offices of many unions.” Several former trade union leaders have certainly become extremely wealthy on the backs of successful union investment companies.
Yet much of the turmoil in a number of unions, that saw the virtual collapse of several, has been the result of fights over investment company resources. Lucrative companies have also meant that unions could cease to rely on membership dues to survive, resulting in less service to members, so weakening the labour movement.
Even the proclaimed “Marxist-Leninist” trade union, the National Union of Metalworkers of SA has a powerful investment company. This led, last year, to fears expressed by some Numsa members that the union was “being captured by capital”.

It certainly is a contradiction for the organised representatives of the sellers of labour to profit from extracting “surplus value” from other sellers of labour; to play an active role, effectively supporting a system most blame for society’s ills Since the interests of workers and those of employers, in terms of profits and wages, are diametrically opposed, the best relationship is probably a form of creative tension.

But, especially at times of economic crisis and where unions are still a force to be reckoned with, there are always attempts to undermine or co-opt them, often by means of a “social compact”. The demand for such an arrangement — the unity of government, business and the labour movement — has been promoted by President Cyril Ramaphosa as an answer to the difficulties the country now faces. In his Budget speech, Mboweni also noted: “We all need to pull together.”

But a social compact, with the three organised segments of modern society acting in unison, is a pipe dream unless labour becomes a mere conveyor belt for the ruling party and government which, in turn, serves the interests, primarily, of business.

This is the recipe for what Count Otto von Bismarck, he of 19th Century German unification, called “state socialism”. The more modern — and more accurate — description is state capitalism. This is the system practiced in the former Soviet Union, certainly after 1928, and, later, in its satellites, along with the regimes in countries such as China, Cuba and North Korea.

In these systems there is, in its most advanced form, a fusion of the state and capital within the existing system of profit orientated competition. To keep the working class majority in thrall, a sometimes elaborate system of patronage can be introduced allowing for most basic needs to be met at often very basic levels. This system is generally — and wrongly — dubbed “socialism”.

But while it is not an alternative to the present system, it is a variation — a bad one from the point of view of labour — and it does pose as an alternative. Time perhaps for labour to counter with better variations or, preferably, a clearly costed and articulated route to a real alternative.