Need for a new anti-privatisation fight

Posted on February 20, 2022


(First published on Fin24 and City Press, South Africa 18 & 20 February 2022)

There was nothing new in the effective nod to privatisation in President Cyril Ramaphosa’s State of the Nation Address last week. But it — and the largely muted opposition to it — seemed perhaps to indicate the end of a 25-year ideological tussle within the governing alliance. But it also signalled the possible emergence of a new and more nuanced resistance.

The formal battle began in 1996 when then-president Nelson Rolihlahla Mandela publicly repeated an earlier comment: “Privatisation is the policy of the government.” This had the effect of putting an official stamp on an about-turn to what had been ANC policy only five years earlier.  

The framework formulated over years by the ANC’s high-powered Macro-Economic Research Group (Merg) had called for a high degree of state intervention to remedy the inequalities and imbalances of apartheid.  This included retaining existing state-owned enterprises while also exercising state control of the “commanding heights” of the economy.

This orientation suited the ANC’s alliance partners, the SA Communist Party (SACP) and the major trade union federation, Cosatu, that was heavily influenced by the SACP. “But when Mandela returned from the [1992 Davos] meeting of the World Economic Forum, he said privatisation was a fundamental policy of the ANC,” remembers former Cosatu general secretary, Zwelinzima Vavi, now general secretary of the SA Federation of Trade Unions (Saftu).

However, Mandela had given the first clear indication of a policy shift when, in Davos, he addressed this private club of the world’s wealthiest tycoons. He noted: “We visualise a mixed economy, in which the private sector would play a central and critical role to ensure the creation of wealth and jobs.”

This was music to the ears of business, caused a flurry of disappointment and anger within much of the labour movement and resulted in considerable confusion and consternation within the ranks of the ANC.

The leaderships of all three parties then got down to draft their macro-economic visions in order to influence any outcome.

First off the mark was business with a document entitled Growth for All and advocating a liberal, “free market” approach in line with what had been dubbed the “Washington consensus” or “neoliberalism”. The combined labour movement followed with Social Equity and Job Creation, the most substantial of the three documents that emerged. It was based on the work of the Merg of the ANC and was premised on an ANC governed state being truly representative of “the people”.

Finally, the government produced a document entitled Growth Employment and Redistribution. As one mainstream economist noted at the time, GEAR amounted to “a cascade of improbabilities”.  It seemed, in fact, to reflect the divisions and confusion within a governing party that desired a strongly private sector route, but felt incapable of implementing it.

This was hardly surprising, given the nature of the alliance. As the battle was joined, a National Economic Forum was established and strikes were threatened. In the process, the debate most often degenerated into an argument for either state or private sector ownership and control, with the former claimed to be inherently inefficient.

At the time, there were similar debates in other parts of the world as the looming global economic crisis, threatened since the oil shock of 1973, began to bite. Argentina was one of the first to succumb, with an effective economic collapse between 1999 and 2001.  

This resulted in a surge of grassroots worker militancy as workers took over failing and bankrupt enterprises. These actions probably shook the established and bureaucratic trade union movement even more than they did the business establishment.

Today, despite a multitude of difficulties, numbers of these businesses survive, the most famous of which is the ceramics factory known as Fábrica Sin Patrones (FaSinPat — Factory Without Bosses). Profits from the enterprise support the local community and the unemployed workers’ movement.

But there are a number of other examples of cooperative success within the established system, the oldest and largest of which is probably the John Lewis Partnership, established in Britain in 1919. It is one of some 470 worker controlled enterprises in Britain that, together, account for nearly 4% of that country’s GDP.

These provide evidence that it is not the nature of ownership that determines efficiency and effectiveness. There are plenty of examples of efficient state, private and cooperatively owned and controlled businesses. Just as there are many examples of private sector and government graft and corruption and, in all cases, efficient management and control is vital.

The prime question that must be asked, especially in terms of essential services such as water, sanitation, transport and power is: who are the prime beneficiaries? Does the business prioritise private profit or public service? If profit is the main motive, it can only come at the cost to the consumers — the “people”.

These are the debates that are starting again to stir within elements of the weakened trade union movement and among various community groups. Time will tell whether they grow and coalesce. And perhaps Vavi is correct to note: “Without that unity the working class is dead in the water.”

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