After the Miracle: Can South Africa Be a Normal State?

After the Miracle: Can South Africa Be a Normal State?

Mini Teaser: South Africa today, to paraphrase Marx, is haunted by a specter: the specter of the rest of Africa. This ghost hovers not only over whites, and over investors who are influenced by them, but over blacks as well.

by Author(s): John Chettle

The same is true of the crime wave, but here some more serious
reservations are in order. The Financial Times of London pointed to
crime as the most significant factor inflicting damage on
international views of the country. An average of 52 people were
murdered each day in South Africa, a total of 18,893 in 1995,
proportionately nine times higher than in the United States. In 1995,
according to the corporate sponsored Project on Crime, Violence and
Investment (in itself a meaningful name to give a project) there were
97,950 car thefts. That is equivalent to nearly 47 percent of total
sales in the year. When one links that to the evidence that police
rings are organizing car thefts, that many of the stolen cars are
exported, and that 30 percent of all goods landed at Durban's port
are disappearing, it suggests very extensive corruption among police,
customs, harbor authority, and other officials. This is not the work
merely of young, nervous, trigger-happy gunmen who confront the
motorist. It may be the most serious remnant of the moral corruption
of apartheid, and if it is not defeated soon the consequences could
be profound. It contributes to what one political scientist has
called "the negative halo effect." It strengthens the notion that
South Africa is fast becoming just another lawless African state. It
fosters the impression of government incompetence. It may be the
biggest single reason for the exodus--still not statistically
significant, but potentially so--of young professionals whose skills
are not easily replaceable. It is not surprising, then, to find these
factors--crime and consequent emigration--cited by Anton Rupert,
chairman of the worldwide Rembrandt Group, as the greatest threats
facing the country.

The best one can say about all this is that the government now
understands the magnitude of the problem. Polls show massive public
support for a tough response, including nearly 90 percent in favor of
a reintroduction of the death penalty. The army has been mobilized to
assist the police. Jails now hold a record 123,000 prisoners, and
there are some signs that crime is diminishing.

The worst of the other potential violence that has plagued the
country for many years has clearly abated. Loss of life in Natal, the
worst battleground, is down sharply, and the provincial election
there was held largely without incident. The ANC and the Inkatha
Freedom Party (IFP) are making a serious attempt to end the violence
between them, but it is not the first such attempt, and it would be a
bold analyst who concluded that this time it would be totally
successful. The problem is that much of the violence derives from a
power struggle: in Natal, the IFP currently has it, the ANC wants it.
If the IFP were to exercise power more equitably and the ANC were to
content itself for the time being with governing the rest of the
country, that would help--but then that has been true since 1994.

Neither Marx Nor Apartheid

The last of the high profile issues affecting the economy, and
probably the most significant, is the doubt that prevails as to the
government's economic philosophy and management. This may be the very
issue on which the new government should be least vulnerable. For the
paradox is that the unconscionable delay in bringing about democracy
in South Africa has meant that it arrived, in many respects, at
precisely the right time. South Africa's good fortune was to gain its
independence as a truly democratic state at the very moment when the
ideas that had sustained both the Nationalists and the ANC were in
receivership. Both apartheid and Marxism were profoundly statist
philosophies. The racial views of the Nationalists tended to
overshadow their economic views, but it was always clear that
apartheid could not be implemented without a high degree of state
control of the economy. The early Nationalist governments were wildly
protectionist, redistributionist (mainly from the English to the
Afrikaners, but also from non-whites), and statist; they brought
parts of the economy--and society--one after the other, directly or
indirectly, under government control. People did not separate
themselves naturally and geographically into groups; they had to be
forced to do so.

For its part, the African National Congress was, as it continues to
be, part of an alliance that includes the South African Communist
Party. The ANC's economic policies were indeed dominated by the
Communist Party, which explains why the ANC stood for the
nationalization of the commanding heights of the economy, banks,
land, and "monopoly industry." Discussion in the party, to the extent
that it dealt with these issues, suggested that the conception of
monopoly industry was a very broad one, so much so that it might or
might not also encompass barber shops. The ANC maneuvered constantly
to keep its alliance together, to preserve its relationship with the
Soviets and other left-wing sources of funding, without totally
alienating the West.

Both the ANC and the Nationalists were devastated by the events of
the 1980s and early 1990s. For the Nationalists, it was clear by the
early 1980s, if not before, that apartheid as a philosophy and as a
political objective was dead. The problem was how to arrange a
strategic burial, how to propitiate its supporters, and what to put
in its place. The Nationalists, who had helped to create a state that
at one stage incorporated more than half of the country's fixed
assets and 30 percent of its active wage force, now embraced the free
market with the fervor of a convert.

What is more surprising is what happened to the ANC. The fall of
communism and the conclusive evidence of its moral and economic
inadequacy left its captains at sea without a compass. The period
between the legalization of the ANC in 1990 and its assumption of
power in 1994 witnessed what may have been the most sustained and
successful economic seminar in history. The education began from a
fairly low base. The late Chris Hani, leader of the South African
Communist Party, when asked at a meeting in Washington how he could
have gone on lengthy trips to the Soviet Union and failed to notice
the economic realities, responded pathetically, "We were told that
they had solved the problem of unemployment." Mandela himself for
more than two years continued to profess his belief in
nationalization. The ANC, hitherto insulated from economic realities
and with no experience in dealing with the complexities of a modern
state, was subjected to an intensive education from world leaders,
international businessmen, and domestic interest groups.

The vacuum that was left by the demise of communism and apartheid has
gradually but definitively been occupied by prevailing Western
economic views: ones that stress budgetary restraint, lowering the
deficit, controlling inflation, creating an environment friendly to
business, cutting regulation, and--most remarkable of all in a party
that in its freedom charter pledged to nationalize the commanding
heights of the economy--moving toward dismantling state monopolies
and selling off their assets. The government will sell all of Sun
Air, Transkei Air, and Autonet (the road haulage part of the old
South African Railways and Harbours), part of Telkom (the
telecommunications monopoly), South African Airways and the Airports
Company, and Mossgas (the off-share gas exploration company). It will
also restructure other assets and is considering outsourcing of
municipal activities, equity partnerships, and the outright sale of
municipal assets and housing. It is as if the commanding heights were
now occupied by the Chicago School.

No less remarkable, the party leadership has been successful over the
last two years in persuading much of the trade union movement to
accept privatization, if not exactly to embrace it. "It's not a
question of being anti- or pro-privatisation", said Sam Shilowa, the
president of the Congress of South African Trade Unions (COSATU),
"The debate now is over the best way of restructuring state assets
and the role of the state in production." Cosatu's conversion,
commented Business Day, "is neither graceful nor wholehearted", but
the shift "signals that the issue is no longer 'Whether', but what,
when and how." In truth, the South African trade union movement,
whatever its underlying fears, has taken a more benign attitude to
privatization than its European and maybe even its North American
counterparts.

The government has also taken steps to lower the deficit without
significantly raising taxes, it has reduced state intervention, and
it has lowered tariffs to expose protected domestic industries to
competition (and, in the process, impinged directly upon the job
expectations of its supporters). The dual currency system has been
eliminated. (This system created one rate of exchange for commercial
transactions and one for investment, and made it difficult for
foreign investors to take money out of the country.) A good many
petty restrictions have been lifted, too. Brokers around the world,
for example, can finally trade on the Johannesburg Stock Exchange;
fixed commissions have been eliminated; computerized trading has been
installed. In 1995 inflation was contained at 8.7 percent, the lowest
that it has been in the last twenty-three years. GDP in 1995 was up
3.5 percent. Each of these actions has had a momentary impact on
investors, but the effect of each dissipates rapidly. Investors, like
fading beauties, are in constant need of reassurance.

Essay Types: Essay