ANC national executive committee member and deputy finance minister David Masondo has warned the SACP that even if it were to win state power, capitalists would remain indispensable for economic growth.
In a submission last week during the Nehawu political school, Masondo urged the working class to interrogate the dynamics between a leftist party in power and its interactions with capital and labour.
He said that even if the SACP swept the elections with a landslide victory, this would not signify a break with capitalism. The crux of the issue was how an SACP-led state could set conditions for private capital’s developmental role, he said.
“This would require not only levelling the playing field for business investment but also for the state to subsidise and discipline capital.”
No escape from capitalism
Masondo said that “given the current balance of class forces, capital will not be overthrown soon”.
“There are no prospects of a rupture with capitalism in most parts of the world, including South Africa.
“An approach that ignores this objective reality would be very rich in enthusiastic spirit. But would be poor in analytical and strategic grounding. And may lead to voluntaristic calls for the immediate overthrow of capital,” he added.
Also, economic resources were heavily concentrated in the hands of capitalists, he said. He cited that in South Africa, over 60% of investments come from the private sector. This makes both the labour market and state revenues reliant on private investment.
He said that without such investment, the state can’t generate the necessary revenue through taxes and wages.
“Therefore, states under capitalism are forced to establish conducive environments for businesses to invest in. This is including in South Africa.
“The task of the developmental state is to create business investment conditions that would produce transformative developmental outcomes that include high levels of industrialisation, employment, and so on. This can only be realised if the working class exerts its structural and organisational power within the state and society.”
Masondo said the intervention of the state in economic development is not a defining feature of a developmental state.
Scope, quality, and instruments of such interventions
“It is not all types of state intervention that make a state a developmental state. After all, states, including the neo-liberal state, intervene in the economy. Rather, it is the scope, quality, and instruments of such interventions that define a developmental state.”
He said one of the key features of a developmental state was its ability to discipline businesses. And to do so to produce certain developmental outcomes associated with levels of industrialisation.
“The developmental state is not a socialist state. It accepts that the economic resources will be in private hands. [It] carries out the task of economic development. And it does so through the subsidisation and disciplining of businesses as a social class to industrialise. In other words, discipline and subsidies go hand-in-hand.”
He said the subsidy is in exchange for businesses performing developmental tasks. “Discipline means that capitalists interested in state support would have to lose some freedom. To lose it over decisions regarding where, when, and how much to invest.”
To discipline business, he said: “The state needs to have certain organisational capacities. These are: extractive capacity (e.g. revenue collection services such as Sars) to extract revenue to subsidise production costs.”
“Secondly, it also requires an uncaptured, rational, and competent bureaucracy. And a political leadership to channel subsidies and foster economic transformation. This via incentives and disincentives to encourage businesses to invest in industrial growth projects.”
SOEs battling, need help
Masondo said many of the South African SOEs have unsustainable debt. Thus disabling them from contributing constructively to the economy.
“The story of Eskom’s debt levels and its failure to provide electricity to households and businesses is well known.”
He said Transnet had operational problems associated with poor investment in its infrastructure and maintenance. “It has a debt of R130-billion, which has increased its debt service costs”.
In addition to this, Transnet requires R50-billion to finance its freight rail infrastructure. The state fiscus cannot afford to finance the debt and the operational infrastructure.
“As a result of the liberalisation of the energy market, he said: “There are significant megawatts generated by private producers. But electricity cannot be added to the grid because there is no related transmission infrastructure.”
“Investment in this infrastructure through the newly established Eskom transmission company requires almost R400-billion. This to finance about 14,000km of transmission infrastructure,” he said.
“What do we do when the state does not have sufficient money to invest in the development of the country’s productive forces, including infrastructure, particularly state-owned network infrastructure (such as energy, freight logistics, water, and telecommunications)?”
Wrong and dogmatic approach
He said there was an argument within left political circles that bringing private capital or workers’ collective savings (e.g., pension funds or shares sold to ordinary citizens) into the state-owned network industries, facilitated either through liberalisation of the SOE sector or offering concessions such as Build-Operate-Transfer, was inherently reactionary.
“This is a wrong and dogmatic approach. Because it ignores how the South African SOEs have been a burden. Not only on the fiscus and the working class, but also on economic growth and development.
“Between 2008 and 2022, the government spent R500-billion bailing out 15 SOEs. And only three (namely DBSA, ACSA, and SASRIA) were turned around,” he said.
Agree, the dogmatic approach of liberalisation of the SOE sector or offering concessions such as Build-Operate-Transfer, was inherently reactionary.