Analysis

The State Capture Debate: Limitations Of Current Applications And Definitions

By Greg Mashaba 

The presidency of Jacob Zuma came to an end 18 months ahead of the date stipulated in the constitution of the Repubic of South Africa. The argument used by his detractors both within the ANC and its Tripartite Alliance and by opposition parties was primarily based on the allegation (as yet untested in court) that he had allowed the state to be captured by the Gupta family. The latter were Indian immigrants who had arrived in South Africa in the early 1990s and had established a powerful business empire spanning the media, mining and information technology sectors. Thus the pre-dominant phrase which characterised the last year of Zuma’s presidency was that of “state capture”.

Although use of the phrase itself was a relatively new development within the context of South African politics, it had been widely used elsewhere. The World Bank had used the same phrase to describe the political situation in eastern and central European countries following the collapse of the Soviet block in the early 1990s wherein, it was argued, a handful of families had usurped the power of the state for personal economic and financial gain. The definition was later extended to define the situation in some Asian countries. Those who had captured the state exercised power over appointment of government officials, including ministers in strategic departments such as the energy and mining sectors, and the defence and intelligence services. Proponents of this definition correctly pointed out that one of the consequences of state capture was that financial and material resources were diverted towards serving the interests of the few families to the detriment of the wider populace. One could further argue that state capture, by its very nature, denies the masses in the country so affected of the right to enjoy popular democratic control over state institutions as they are either covertly or through brute force robbed of the power and the right to exercise control of government through normal democratic processes.

In getting involved in the state capture debate I proceed from the standpoint that the current definition and application of the phrase serves to conceal the real nature of state capture and its consequences. To limit state capture to certain families serves to narrow the definition and to exclude , either through incorrect analysis , or deliberately to sow confusion in the general population. Thus in the latter case, there is a carefully orchestrated political process through which a family or narrow political grouping is blamed for the all manner of political ,economic and social ills which obtain in the country in question. Within the context of South African politics, the term has been restricted to former president Jacob Zuma and the Gupta family. Hence in an interview on the Spanish TV channel El Pais, former president Thabo Mbeki, Zuma’s former comrade-turned political opponent purported to coin another phrase which he referred to as “the Zuma phenomenon“. Not only can such attempt at masking the true nature of state capture be incorrect and be described as being grotesque, but in addition to that, it seeks to conceal the hard reality that Mbeki himself and indeed our beloved father of the nation Nelson Mandela presided over a captured state which we had inherited from our former racist and colonial oppressors.

In preparation of this presentation, I had the privilege of reading at length the article on the subject at hand which was co-authored by Michaela Martin and Hussein Solomon (1) . While I found the their article to be a useful point of reference, they, in my view, also failed to address the issue in its entirety to the extent that they also sought to restrict the definition to the Zuma presidency. Be that as it may be, they make a very important observation wherein they argue that

“…….When discussing state capture, the state and the economy cannot be conceived as two separate entities. Economic and political power is therefore fused……..Laws and institutions become the product of corrupt transactions so that what counts as legal is itself a function of corruption . “

Therein lies an important observation which in turn raises a couple of important facts, namely that:

  1. State capture is by its nature a complex phenomenon which can conceal itself under the veil of legality and legitimacy;
  2. The dominant political forces and / or class in every country is always positioned to influence the strategic direction of the state, including its political and economic strategy at the expense of and to the detriment of the masses.

Mike Lofgren presents a more useful exposition of the nature of state of state capture ( which he refers to as “ the deep state “ in his examination of the subject within the context of the situation in the United States . In his introduction to the subject he argues that

“..While the public is now more aware of the disproportionate influence of powerful corporations over Washington …..few fully appreciate that the US has in the last several decades undergone a process first identified by Aristotle and later championed by      Machiavelli that the journalist Lawrence Peter Garrett described in the 1930s as a ‘revolution within the form’. Our venerable institutions of government have outwardly remained the same, but they have grown more and more resistant to the popular will as they have become hardwired into a corporate and private influence network with almost unlimited cash to enforce its will”. ( 2 )

Mike Lofgren’s illustration of the tight grip which the powerful corporations exercise over the US government somewhat mirrors that which Hennie van Vuuren uses to describe the situation in South Africa :

“ It is fundamental to understand both the nature of power in South Africa and the nature of elite criminality – the way in which corruption has become ingrained in the practice of our politics and business …. ( from the mid 1970s to the mid 1990s )….a mix of factors gave rise to a perfect storm that left an indelible impact on our history and society . It was a time of unparalleled abuse of power wherein economic crime noT only festered , but became state policy.” ( 3 )

Van Vuuren also underlines the observation which I make in paragraph three herein namely that both Nelson Mandela and Thabo Mbeki presided over a state which, though it bore all the formal hallmarks of a democratic state, was subjected to on-going capture by powerful (and predominantly white) business elites which was transferred from the apartheid state to the new dispensation. He correctly states that the apartheid era pattern of corruption and exploitation and many of the actors…rapidly ingratiated themselves into the new order”.

Some commentators fix the origins of state capture in South Africa, correctly it seems, with the arrival of Jan van Riebeck to the shores of our country in 1652. For purposes of space and brevity I will not go into whole history of the colonial conquest and subsequent subjugation of the indigenous people of South Africa. Suffice to state that our people resisted the racist colonialists from the onset of their arrival through numerous wars and battles which culminated with the Bambatha Rebellion in 1906 . By 1909 the colonialists had accomplished their quest to extend racist and colonial conquest throughout present-day South Africa. The proclamation of the Union of South Africa Act heralded the establishment of the racist state whose sole purpose was the entrenchment of minority racist privilege (representing Afrikanaar and British interests) to the exclusion of the black people. The Afrikaaners further consolidated their hold over the state in 1948 when the Nationalist Party won the racist “general election”.

The apartheid state was not only established for the promotion of the racist and colonial agenda of the white settler minority. In addition to the state itself, business entities including financial institutions and para-statal companies were established for the sole purpose of serving the interests of our white oppressors. Thus was born Volkskas Bank, United Bank, Allied Bank, the Land Bank. Legislation was put in place to give an unfair advantage of white-owned business over that of Black entrepreneurs. BHP Billiton would later be the beneficiary of an ESKOM electricity tariff that was lower than that imposed on domestic users, including the poor black masses. Long-term coal supply contracts , some of which have a life span of fourty years were awarded to the major coal mining houses. These remain “valid” to this day and enjoy the guise of legality while they are in essence the product of corrupt practices. Thus was born the strong unity of purpose and strategic orientation between big business (which remains predominantly white) and the state. Thus use of the term “white monopoly capital” is not a figment of our imagination as Mmusi Maimane and his puppeteers in the Democratic Alliance (DA) would seek to have us believe. Nor is it a creation of Bell Pottinger as the white-controlled media would seek to make us believe. The term white monopoly capital and the latter’s relationship with the state was first coined by the SACP about six decades back when they released their seminal thesis on “colonialism of a special type (CST).

Again, for purposes of brevity and space, I shall not go into a detailed analysis thereof save to state that the thesis is based on the reality of the oppressor nation, the oppressor state and the oppressed being located in the same geographic location rather than in Europe or elsewhere in the northern hemisphere.

The groundwork for capture of the formally democratic state was in part laid down when a group representing some of the most powerful business corporations, Afrikaaner intellectuals theologians who fell within the so-called “verligte” grouping of Afrikakaanerdom, travelled to Dakar, Senegal in 1987 to engage in talks with a delegation of ANC leaders which was led by Mbeki. Although the delegation included progressive Afrikaaners such the Rev Beyers Naude who will always be remembered as heroes of our struggle, there were also capitalists who had amassed immense wealth as a result of the policy of apartheid. Prior to that trip, Gavin Relly, then head of the mining giant Anglo American had led a group in 1985 comprising of some of the most powerful businessmen in apartheid-era South Africa to Zambia for talks with ANC leader Oliver Tambo. The growing isolation of apartheid South Africa which was underpinned by tough economic and political sanctions coupled with unprecedented protests in the sprawling townships dotted around the major metropolitan areas had gradually eroded the profit margins of the white-owned business entities. Some of the “enlightened “ Afrikaaners who accompanied Relly had already realised that it would be a matter of time before a new political dispensation at the head of which would sit the ANC was imminent. Engagement of the ANC to gauge its economic policy had become imperative. The primary objective of Relly and his companions could correctly be understood as an attempt to secure assurances that a future ANC-led government would not be hostile to capitalism.

Thando Ntlemeza presents a very useful and very well- reasoned analysis of the manner in which our former oppressors conspired to retain control of key sectors of the economy which in turn gave them leverage over the democratically elected government following the 1994 political transition. I quote the article at length:

“ Evident during the process of negotiations was the fact that the representatives of the apartheid regime sought an outcome that would leave many elements of the apartheid state intact. To them the sunset clauses had to retain white power in form of – the accumulated, palpable privileges that whites …..enjoy in terms of ownership an control of productive property; domination of the professions and high levels of skills; control of the commercial and financial sectors of the economy……access to and domination of the civil service and control over the decisive organs of the state.

“ …..the sunset clauses have left our country with a legacy of political    economy characterised by a black-controlled state and a white-controlled economy as well as mass poverty for the historically disadvantaged sections in our society….While progressive forces have attained political power, economic power remains largely in the hands of the white minority. For this reason , Ngoako Ramatlodi says ‘apartheid forces sought to and succeeded in retaining white dominance under a black government” (4)

I am not an expert on the Marx-Leninist position on the role of the state. Therefore I look in the direction of our comrades in the SACP for guidance and direction should I be found to be incorrect in my analysis thereof. It is my understanding that the genesis of Marxist-Leninist thesis on the role of the state is to be found in Vladimir Lenin’s ground-breaking work, “The State And The Revolution“ which he authored in 1917. In a nutshell Lenin argues that the state is an instrument of oppression of one class by another. Though not myself a communist I am inclined to find this argument useful regarding the situation in our country.

Although the post 1994dispensation ushered in formal and constitutional changes which sought to confine racial oppression to the dustbin of history, it however did not change the power relations which had hitherto existed under apartheid. Through their possession of economic power, our white oppressors continued to exercise control over the economic direction which the formally democratic government would have to take. Nelson Mandela’s appointment of Chris Liebenberg, a former CEO of Nedbank and his decision to retain Chris Stals as governor of the South African Reserve Bank (SARB) were measures which were not only taken to instil confidence of capitalists in the new dispensation but were over and above that, indications of the tight grip which monopoly capital (which is by its nature white in South Africa) exercised over the formally independent, democratic, and non-racial state.

The four major banks in South Africa, namely ABSA Bank, Standard Bank, First National Bank and Nedbank together with South African Reserve Bank and the Johannesburg Securities Exchange (the “JSE”) can, for lack of better phraseology, be described as “the power behind the throne”. They wield immense power over both the state and the populace. They have the power to indirectly but forcefully to dictate economic and political policy of the government. In most cases such power and influence is exercised covertly but it can in certain instances be wielded openly and in an extra-ordinarily arrogant manner. The funding of the “Save South Africa” campaign which led to the ultimate ouster of Jacob Zuma as president of the republic is a case in point. So is the hostility to the current Public Protector, Advocate Busisiwe Mkhwebane who dared the anger of these champions of brute capitalism by proposing that the mandate of the Reserve Bank be revised. The hostility to Advocate Mkhwebane which had hitherto been largely confined to the Democratic Alliance spread overnight to include even sections within the ANC who are apologetic to the white monopoly capital. Since then she has had to maintain a tenuous grip on the office as she faces calls for removal which are reminiscent of the Inquisition.

Paul Tucker, former deputy governor of the Bank of England in his recently published book “Unelected Power” (5) presents a brilliant account of how the banking sector and in particular the central banks of most countries usurp the power and authority of the state, of how they impose their will on the electorate even though they are not accountable to the same. Those who sought to present Advocate Mkhwebane as an idiot following issue of the Ciex Report and her recommendation regarding the SARB would do well to purchase copies of Paul Tucker’s book. Indeed if I had the financial resources to do so I would personally buy a copy for Governor Lesetja Kganyago, his colleagues, our minister of finance and some of our senior ANC members of parliament. A copy of a brief article on the subject by Tucker, which first appeared in the April/May issue of “Financial World” is published here today http://uncensoredopinion.co.za/reducing-the-power/ His introduction to the subject is very interesting:

“More and more of our governments seem to be in the hands of technocrats insulated from day to day politics: activists judges, independent regulatory agencies , and of course central bankers , who have become the poster boys and girls of unelected power.” (6).

Given that I wish to keep my article short, I shall not go into detail regarding the role of the rating agencies in state capture. I will defer this to a future article not unless there is another contributor who would be willing to submit a detailed examination of the role of these institutions in determining the economic policies of sovereign states. In a nutshell, they act and function in the very same manner as the financial institutions. In fact they act in collusion with the latter.

In closing I would strongly recommend that those seeking a deeper understanding of the subject read in detail the above-mentioned articles by Thando Ntlemeza, Paul Tucker, and Hennie van Vurrens book.

1.Michaela Martin and Hussein Solomon “Understanding the phemenon of ‘state capture’ in South Africa “ . Southern African Peace and Security Studies. Volume 5, Number 1

  1. Mike Lofgren “The Deep State : The fall of the constitution and the rise of the shadow government “ ( Penguin Books ) 2016 . ISBN 10: 0143109936/ ISBN 13: 9780143109938
  2. Hennie van Vuuren “Apartheid Guns And Money “ ( Jacana Media ) 2017 . ISBN 9781431424849.
  3. Thando Ntlemeza “ Does South Africa Still Have Room For The Sunset Clauses ? .“ Umrabulo, Number 37, 4th Quarter 2011.
  4. Paul Tucker “Unelected Power “ ( Princeton University Press ) 2018 . ISBN 9780691176734.
  5. Paul Tucker “ Reducing The Power “ Financial World . April/May 2018

Greg Alexander Mashaba is a member of the ANC Branch in Ward 23 Ekurhuleni. He writes in his personal capacity.

 

 

 

 

 

 

 

 

 

 

 

 

 

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3 Comments

  1. The key question for me has always been to what extent has the people who have been given the power to legislate and regulate these corporate capturers been captured? How many of the key decision makers in government have shareholdings in the same institutions that they are meant to regulate?

  2. Thanks for the article. Wish more people had your insights but then again they are willing to be captured and sell out.

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