[A comment on the book “The economy on your doorstep” (TEOYD) by Ayabonga Cawe.]
By Ronald@bentec.co.za
Acts of violent sabotage and a wave of mass looting engulfed South Africa’s KwaZulu-Natal and Gauteng provinces as I was reading this book. These events were triggered by the imprisonment of former president Jacob Zuma on a charge of contempt of court, but commentators quickly agreed that the structure and state of the economy were central to what was happening. TEOYD is an excellent book by one of the foremost economists in the country who, as a host on South Africa’s most popular English language radio station, has demonstrated a knack for talking economics with Reserve Bank governors as well as casual workers. What insights does it offer that can help us understand the unrest of July 2021?
Without attempting to exhaust its rich offerings, there are some points that struck me.
Cawe raises the issue of local government’s role in the economy and specifically the needed synergy between the economic interventions of local governments and that of their national and provincial counterparts. Readers feel the author’s frustration (exasperation?) with the lack of a clear plan that brings expenditure and especially investment by different levels of government in line with job creation and industrial development. A large and fascinating part of the book lays out the details of what such a plan could look like in Cawe’s origin province of the Eastern Cape. What does this have to do with the unrest? Everything; which becomes clear as we follow Cawe’s argument.
TEOYD locates this absence of a jobs/manufacturing plan within the interlocking of South Africa’s socio-economic structure and policy orientation. At the top of the economic pyramid in the most unequal country in the world sit the owners of the financial, mining, agriculture, retail and diminished manufacturing sectors. They make the money to pay for their palatial doorsteps in Sandton, Stellenbosch and London either from overseas markets or from domestic consumption financed by credit. In other words, this group does not need increased manufacturing output to drive their profits, nor do they need more wage earners to increase spending and profits. Their domination of the economy and policy making is the ultimate block on the growth of manufacturing, which alone can create sustainable jobs and also form the basis for the development of a black capitalist class of significant size and, importantly, with some independence from government service tenders and share subsidies from big capital.
In my view, the unrest of July 2021 is an almost perfect illustration of the forces unleashed as a result of the situation Cawe describes and analyses with the precision of an economist and the popular touch of a radio host. The Zuma group politically represents that section of the Black middle and aspirant capitalist class that is frustrated with being locked out of the ownership of the wealthiest parts of the economy and being reduced to self-enrichment through tenderpreneurship and corruption. As comes through in the book, they are not the bearers of a political-economic programme in support of manufacturing and industrial development. (One of TEOYD’s gripes is the lack of political champions for such an obviously necessary and doable programme.) Instead, they represent a driver of the disconnection between expenditure and industrial development, because they prioritise their own enrichment out of government spending over maximising the development impact of such spending. Nevertheless, TEOYD helps us understand this group by illuminating the dominance of white owned financial capital from where the frustrations of this group stem.
This dominance is politically represented by the Ramaphosa group. The confidence of finance capital in this group was demonstrated by, among other things, the stability of the rand and the ‘nothing to worry about’ message by the Fitch ratings agency. The Ramaphosa group’s ‘restore order’ and more of the same agenda would surprise no one that read TEOYD’s explanation of the faithful embrace between economic policy and finance capital.
Then, the looters. After the initial actions by the Zuma group, masses of people broke into food stores and helped themselves. TEOYD paints the picture of poverty, inequality, unemployment and stagnant development that made such occurrences inevitable. This, the most heartrending aspect of the book, is perhaps its most uncontroversial. The country has been waiting for a megaton explosion for years. This was not it. But no one can say that hungry, jobless people looting shops is a surprise.
Finally, there was another group among the looters about whom TEOYD is at its most helpful and thought provoking. As much as the looting was a classical food riot driven by hunger, that was not the only thing that was happening. There were groups among the looters who arrived with expensive vehicles and targeted flat screen TVs and luxury household goods. One of them included a CEO of a financial company! TEOYD provides insight into this group.
It explains how finance capital drives a culture of consumerism that pushes people to go into debt in order to acquire the latest consumer goods that are tied to hunger not for food but for recognition and status. This group clearly seized the opportunity presented by the unrest and went for the double door fridges and leather couches that they would otherwise have to buy on credit. In Cawe’s telling, financialisation is not something that only happens at the top of the economy. It permeates society and becomes a culture. The CEO looter loading the double fridge into his German sedan is much more a feature of the socio-political landscape than we might have assumed.