By Carl Niehaus


Words come easy to us South Africans. We like to talk, debate and argue. Similarly we like to formulate policies and plans. Our political and economic landscape is scattered with policy documents – some of which are actually rather good and inspiring. But do we walk the talk, or are we a nation of talkers rather than doers?

My space is limited and this is a complex issue, so let me concentrate on one example to address the question I am posing: In 2012 at the ANC’s 53rd National Conference in Mangaung it was resolved to advance economic transformation in order to promote growth and development and eradicate the triple scourge of unemployment, poverty and inequality. In order to achieve this the National Development Plan (NDP) and the New Growth Path and the Industrial Policy Action Plan featured prominently with the aim of stimulating growth, employment and the re-industrialisation of the South African economy.

The lofty intention was to build a developmental state with the technical and political capacity to lead development and transform the economy. This was to be done while simultaneously mounting a supportive macroeconomic policy framework, which should be oriented towards reconstruction, growth and development, and informed by the imperatives of sustainability and long-run macroeconomic stability.

In the Economic Discussion Document for the forthcoming ANC’s National Policy Conference entitled: Employment Creation, Economic Growth and Structural Change: Strengthening the Programme of Radical Economic Transformation, it is stated that the ANC ‘remains unwavering in its objective to fundamentally change the racialised and unequal structure of the South African economy and of society’.

To my mind the Discussion Document quiet correctly traces this commitment back to the Freedom Charter, adopted in 1955, which states that all people in South Africa should enjoy equal rights and opportunities, including that:

the people shall share in the country’s wealth”;

– “the land shall be shared among those who work it”;
– “there shall be work and security”;
– “the doors of learning and culture shall be opened”; and
– “there shall be houses, security and comfort”.

It follows that for this to be achieved our economy will have to become truly inclusive, rather than the current economic reality where the majority of (especially African) South Africans are at best on the margins of the economy, or often totally excluded.

In order to achieve this a strong state, capable to intervene and transform this unacceptable situation, is required. Failure to do so will only continue to perpetuate the current unjust and exploitative situation, because the current reality is that, (and I quote again from the same ANC Discussion Document): ‘South African society is underpinned by a colonially-structured economy and racial capitalism. Without effective structural interventions, the system will continue to reproduce race based poverty and inequality.’

Referring to the National Development Plan (NDP) and the government’s Industrial Policy Action Plan (IPAP), which articulate a range of interventions in order to bring about Radical Economic Transformation, considerable attention is given to the ANC’s vision of a Developmental State that will promote inclusive growth and job creation. The ideals of the NDP are quoted as follows: ‘In 2030, the economy should be close to full employment, equip people with the skills that they need, ensure that ownership is less concentrated and more diverse (where black people and women own a significant share of productive assets [my emphasis]); and be able to grow rapidly, providing the resources to pay for investment in human and physical capital‘.

These are truly laudable, revolutionary objectives, and if we can achieve them we will be well on our way to achieve Radical Economic Transformation that will bring economic power and justice to the majority of South Africans. But how do we even begin to get from the horrible exploitative situation that we find ourselves now in, to this ideal? That is exactly where ‘walking the talk’ comes into play…

So while we actually do get up to walk, let’s start by disabusing ourselves from a couple of myths: Economic growth on its own, is not always inclusive, not does it necessarily create jobs. From the late 1990’s into the mid 2000’s the South African economy experienced significant growth, but it was jobless growth of the kind that actually worsened inequality and strengthened the grip of White Monopoly Capital. Truly inclusive growth must combine growing GDP per capita, with increasing levels of employment, expansion of productive activities and massively increased opportunities, particularly for black South Africans.

The reality is that this is just not going to happen until the structure of the South African economy is so fundamentally changed that the black (African) majority are in control of the economy and have become the definitive decision makers, determining policy and the direction in which the economy should develop.

In a document that I recently presented on behalf of the KwaZulu-Natal Progressive Professionals Forum (PPF) at a stakeholder engagement meeting with Mr. Sihle Zikalala, KZN MEC for Economic Development, Tourism and Environmental Affairs, I described Radical Economic Transformation as follows: ‘…specific and well-planned interventions to bring about a fundamental realignment of the balance of forces in our economy… [with the intention] to once and for all bring an end to the control of our economy by the white minority who have ceded democratic power at the ballot box, but continue to hold onto to their control of the economy of our country.’

In his seminal Prison Notebooks, Antonio Gramsci pointed out that the bourgeoisie (for our purposes read White Monopoly Capital) develops a hegemonic culture using ideology through their control of the economy. This hegemonic culture propagates its own values and norms so that they become the ‘common sense‘ values of all and thus maintain the status quo. Hegemonic power is therefore used to maintain consent to the capitalist order. This cultural hegemony is produced and reproduced by the dominant class through the institutions that form the superstructure.

In order to break this hegemony of the capitalist class the poor and oppressed classes have to build their own hegemony. These classes must gain control over the land and the means of production so that a new hegemony of the majority can become dominant and can gain control of the superstructure, so that the values of the White Monopoly Capital status quo – as they are also promoted by the main stream media – will no longer be embraced as ‘normal’ or ‘common sense’ values, but become exposed as the tools of exploitation that they are.

To achieve this is a hard battle that cannot simply be won by formulating good policy documents and passing resolutions at conferences. This will only be achieved through the terrain that is already gained on the ground. In reality one can only secure a radical change in the balance of power at the negotiating table when the power in the real world has already shifted.

Through acknowledging this reality, the analysis of Professor Chris Malikane, recently appointed economic advisor to the Minister of Finance, Mr. Malusi Gigaba, in his paper, Concerning the Current Situation, is very relevant. Professor Malikane states that the strength of White Monopoly Capital is that it owns and controls South Africa’s resources and has strong international backers. Thus, South Africa is a practical example of Gramsci’s description of bourgeois hegemony. Professor Malikane writes: “The dominance of white monopoly capital in the economy determines the nature of the state and the society as a whole… [in fact] the existence of the state itself is supported by the resources that have been monopolised by white capital…. Therefore not only is the state objectively owned and controlled by white monopoly capital, in fact largely the whole of society is under white monopoly capitalist control.”

While we debate all over the place about who have captured whom, or who is trying to capture the state, the state is already well and truly captured by White Monopoly Capital!

That was the reality that the ANC inherited when we took over the government in 1994, and up to now we have not managed to escape from this White Monopoly Capital imprisonment. It explains why despite some of our successes to bring a better life to all South Africans – we have overall failed to change the harsh realities of black poverty and white privilege.

Of course White Monopoly Capital would not want us to realise this, they would like us to believe this situation is just ‘common sense’ and ‘normal’ (as Gramsci warned us they would). Thus, ideologically white monopoly capitalists have even started a campaign – using their control of the mainstream media – in which their very existence and relevance is denied!

Having exposed this fallacy that White Monopoly Capital and their mainstream media propagandists are trying to sell to us, like smooth sweet white ice cream, Professor Malikane cuts to the chase in his paper, pointing out that the cornerstone of the ownership and control of the state has always been the National Treasury, its associated agencies and the Reserve Bank, which constitutes the financial cluster of the state. He points out that the ruling party has never exercised political autonomy in relation to appointments to strategic positions in the financial cluster of the state.

However, this has for the first time changed with the removal of the Finance Minister, without the approval of White Monopoly Capital. It seems that finally we have reached the end of unfettered White Monopoly Capitalist domination – at least with regards to the state and the ruling party.

This is a red flag to White Monopoly Capital, they are now facing the very real danger that the ground that have been gained from them at Treasury can eventually shift the economic power dynamics to such and extent that they can actually loose control of ‘their’ captured state.

As I have written in a previous article this explains why White Monopoly Capital responded with such venom against the ANC government’s plan for Radical Economic Transformation: ‘Let us not fool ourselves the massive amounts of money that they have ploughed into the so-called Save South Africa campaign and mainstream media attacks on President Zuma, and more specifically Radical Economic Transformation is an all out effort to sustain their grip on the South African economy. Their main aim is to avoid any significant change in the status quo (of the ‘normal’) oppressive and exploitative economic power dynamics of South Africa.’

Whether White Monopoly Capital will succeed or whether Radical Economic Transformation will proceed and emerge victoriously, will be determined by how we now utilise the beachhead that the cabinet reshuffle had gained at National Treasury in the interest of the majority of black oppressed South Africans.

As I have said this will not be done through the writing of position papers and passing of resolutions, it will be determined by hard work and gains on the ground at the real economic coalface of South Africa:

  •  The overarching task will be to complete the National Democratic Revolution, and to bring once and for all an end to the domination of black people (particularly the African population) by White Monopoly Capital.
  • To the extent that it is not yet in existence we should establish a broad anti-White Monopoly Capitalist united front, forging unity among all the classes and strata that suffer from White Monopoly Capitalist domination.
  • In bringing together this broad-based anti-White Monopoly Capitalist Front we should isolate those who are the enemies of the people (and who in the last few weeks have again showed themselves up to be such determined enemies in the manner in which they have made common cause to resist Radical Economic Transformation). These are the White Monopoly Capitalists (who own and control the means of production and major financial institutions as well as a disproportionate share of the land); and the credit-based black capitalists, who like parasites rely on their accumulation of wealth on the White Monopoly Capitalist establishments.

This broad anti-White Monopoly Capital united front should mobilise on the ground (yes, literally in the streets) for the expropriation of white monopoly capitalist establishments, and the establishment of a state bank, which should consolidate all the state-owned financial institutions in order to facilitate affordable credit. Serious consideration should be given to the nationalisation of the South African Reserve Bank, and the expropriation of land without compensation.

The ANC government should with determination pursue the provision of free quality social services regarding education, health care, housing and reliable basic services such as water, sanitation and electricity. Furthermore employment equity should be enforced with the state ensuring that there is 100% compliance, and that the violation of labour laws are criminalised.

To be successful in gaining solid ground on all these fronts we will have to forge the broadest possible united front among all of those who are the victims of the controlling grip and exploitation of White Monopoly Capital. Forging unity among ourselves, and forming alliances with all who suffer under the joke of White Monopoly Capital exploration, is absolutely critical.

As we can see White Monopoly Capital and all its hangers-on and agents (especially the propaganda and false news generated by the mainstream media) are trying every trick in the book to divide us. We have to acknowledge that they have unfortunately registered considerable success in doing so.

The time has come for those of us who want to truly shake off the shackles of injustice and oppression to see the divisive actions of White Monopoly Capital for what they are: Divide and Rule Tactics. As long as we allow these tactics to succeed our state will remained captured, and the people of South Africa will remain no more than slaves in our land.

There can now be no bigger task than to forge unity among all of us who want the second phase of our National Democratic Revolution and thus Radical Economic Transformation to succeed.

*Carl Niehaus is a former member of the NEC of the ANC and MK veteran.

All Carl’s articles can also be found on his blog, Carl’s Corner: www.carlniehaus.co.za

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  1. Such a powerful article!! Africans need to unite and support the ANC in it RET,even though it may not happen over night. United we stand and divided we fall. White monopoly will not succeed and their propaganda of trying to bring our governmenT into disripute. Save SA from wHom,while our masses are homeless and their own more than 3-4 properties.Africans need to fully support the president of the day and the ruling party ANC.Our generation will have a descent life and a better nation than us. Viva Carl..

  2. Perfectly articulated article. I will recommend more people to read this and join this form

  3. excerpts from the book

    World Poverty

    the No-Nonsense guide

    by Jeremy Seabrook

    New Internationalist / Verso, 2003

    John Berger

    The poverty of our century is unlike that of any other. It is not, as poverty was before, the result of natural scarcity, but of a set of priorities imposed upon the rest of the world by the rich. Consequently, the modern poor are not pitied… but written off as trash.

    According to the US Immigration and Naturalization Service, different parts of the country draw migrants from different countries. Overall, the greatest percentage of undocumented migrants comes from Mexico (54 per cent). In California, out of an annual total of some 200,000, it is thought 64,000 are from Mexico, 23,000 from the Philippines and 1,000 from China. In New York, out of about 154,000, there are 25,000 from the former Soviet Union, 21,000 from the Dominican Republic and 11,000 from China. In Florida, out of 79,000, 22,000 are from Cuba, 8,000 from Haiti and 4,000 from Colombia. In New Jersey, out of 63,000, 6,000 are from India, 5,000 from Dominican Republic, 3,000 from Colombia.

    Poverty USA

    Writer Barbara Ehrenreich spent months living in the low-wage economy of America, to see how difficult it was to survive. She worked waitressing, in a care home, marketing and cleaning. She offers great insight into the invisibles, whose labor is unnoticed, who go to and from work at unpredictable hours. At times, she had to take two jobs to make ends meet. Finding affordable accommodation is an heroic undertaking, even trailers and rented rooms proving beyond the means of the low paid. Having paid rent, and waiting for a pay check, she has no money for food. Following labyrinthine inquiries, she learns that food vouchers are available for the working poor. ‘My dinner choices… are limited to any two of the following: one box spaghetti noodles, one jar spaghetti sauce, one can of vegetables, one can of baked beans, one pound of hamburger, a box of Hamburger Helper, or a box of Tuna Helper. No fresh fruit or vegetables, no chicken or cheese, and oddly, no tuna to help out with. For breakfast I can have cereal and milk or juice… Bottom line: $7.02 worth of food acquired in 70 minutes of calling and driving, minus $2.80 for the phone calls.”

    Ehrenreich also writes of the disappearing poor. Quoting from an article by James Fallows, she says of the blindness of the affluent: ‘As public [state] schools and other public services deteriorate, those who can afford to do so send their children to private schools and spend their off-hours in private spaces – health clubs, for example, instead of the local park. They don’t ride on public buses and subways. They withdraw from mixed neighborhoods into distant suburbs, gated communities or guarded apartment towers; they shop in stores that, in line with the prevailing “market segmentation”, are designed to appeal to the affluent alone. Even the affluent young are increasingly unlikely to spend their summers learning how the “other half’ lives, as lifeguards, waitresses or housekeepers at resort hotels. The New York Times reports that they now prefer career-relevant activities like summer school or interning in an appropriate professional setting to the sweaty, low-paid and mindnumbing slots that have long been their lot.’

    Everyone knows unemployment creates poverty. But full employment, too, has the same effect if people are not paid a living wage. Ehrenreich says that in 1999 Massachusetts food pantries reported a 72-per-cent increase in demand for their services over the previous year. The percentage of Wisconsin food-stamp families in ‘extreme poverty’ – less than 50 per cent of the federal poverty line – has tripled in the last decade.

    Anti-poverty agency Bread for the World states that 33 million people – including 13 million children – live in households that experience hunger or the risk of hunger. This represents one in ten households in the US.

    In August 2000 19.7 million people participated in the food-stamp program. The US Conference of Mayors reported in 2002 that requests for emergency food assistance increased by an average of 19 per cent. The study found that 48 per cent of those requesting emergency food assistance were members of families with children and that 38 per cent of adults requesting such assistance were employed.

    America’s Second Harvest, the nation’s largest network of food banks, reports that 23.3 million people turned to the agencies they serve in 2001, an increase of over two million since 1997 – 40 per cent were from working families.

    Locking the poor away

    There is another reason why the poor are inconspicuous: so many are locked up. The US presents the strange paradox of a society which constantly professes its devotion to freedom in an aggressively carceral society: a higher percentage of its people is jailed than in any other country in the world. That these people are, overwhelmingly, poor and black is no secret.

    Since felons are subsequently disfranchised, the US now has 1.75 million people disqualified from voting because of their criminality- 1.4 million black men have forfeited their right to vote, almost 15 per cent of the black male population.

    Between 1980 and 1996 the US prison population rose from 1,330,000 to 1,630,940 and has since risen above 2 million. During that time, prison spending rose from $4 billion to $40 billion. Including all those passing through the judicial system at any one time, some four million are caught up in the mechanisms of justice.

    With privatization of the prison system, punishment is a major source of economic growth. What more effective way of placing the poor out of sight of respectable citizens? Of course, this is no new thing, as any student of the Poor Law in Britain will be aware – incarceration in the workhouse in the l9th century was also an attempt to compel the persistent and willful poor to conform to values devised by the possessing classes.

    In the 15 years after 1982, almost 50 new prisons were built in New York State alone, at a cost of $5 billion. Blacks are almost eight times more likely to be imprisoned than whites. At 1997 prices, it cost nearly $150,000 for the construction of each new cell. The cost of maintaining a prisoner is about $50,000 a year. ln spite of this, 47 per cent of prisoners released in New York re-offend within a year.

    Britain cannot match this level of imprisonment, although in February 2003 it had the distinction in the European Union of overtaking Portugal with the proportion of its population it now locks up.

    There is another secret about poverty buried in the statistics. Crime has another social role – it represents the privatization of social justice. Collective action for self-improvement has been delegitimized, done away with by official declarations over the death of socialism. Crime is the response of individuals to socially created wrongs: it is both a caricature of mainstream values (criminals, too, show great enterprise and ingenuity in their operations), and a celebration of heroic individualism at the heart of capitalism-made-global.

    Women work two-thirds of the world’s working hours, produce half the world’s food, yet earn only 10% of the world’s income and own less than 1% of the world’s property.

    Three families – Bill Gates, the Sultan of Brunei and the Walton family (Wal-Mart) – have a combined wealth of some $135 billion. This equals the annual income of 600 million people living in the world’s poorest countries

    Identifying poverty


    * The richest fifth of the world’s people consume 45% of the world’s meat and fish; the poorest fifth 5%

    * The richest fifth consume 58% of total energy, the poorest fifth less than 4%

    * The richest fifth have 74% of all telephone lines, the poorest fifth 1.5%

    * The richest fifth use 84% of all paper, the poorest 20 per cent 1.1 %

    * The richest fifth own 87% of the world’s vehicles, the poorest fifth less than 1 %.


    * There are today about one billion non-literate adults; two-thirds of them are women, of whom 98% live in developing countries

    * 52% of non-literates live in India and China

    * In sub-Saharan Africa, primary school enrollment has declined from 58% to 50% since 1980

    * In the least developed countries 45% of children do not attend school

    * Per-capita income in countries with a literacy rate of less than 55% averages about $600

    * In countries with a literacy rate between 55% and 84% income averages $2,400

    * Where the literacy rate is between 85% and 95% income reaches $3,700

    * Countries with a literacy rate above 96% have an income of $12,600

    Life expectancy

    * In the richest countries, average life expectancy climbed from about 67 years in 1950 to 77 in 1995

    * In the developing countries it grew from 40 to 64 years

    * In the least developed countries it has increased from 36 to 52 years, although in large parts of Africa it is falling once more as a result of HIV/AIDS

    * In 1950 287 children in every 1,000 born in the developing world would die before reaching the age of five. By 1995 this had dropped to 90.

    Least developed countries

    These are the countries which the UN believes, by a variety of measures, have the most ‘development’ still to do.

    Burkina Faso
    Cape Verde
    Central African Republic
    Democratic Republic of Congo
    Equatorial Guinea
    Myanmar (Burma)
    Sao Tome & Principe
    Sierra Leone
    Solomon Islands
    Western Samoa

    Global poverty is not a matter of lack of resources but a consequence of economic control by the rich countries.

    ‘Development’… was a strategy formulated the beginning of the Cold War. The competitive battle with Communism (which broke out in open warfare in Korea and Vietnam) was to last until the Soviet Union disintegrated in 1990. Over time, ‘development’ became a showy display of affluence, in contrast to the austerity associated with socialist economies.

    Bangladeshi economist Anisur Rahman recognized this early on. ‘It was the threat of Bolshevik revolution inspiring social revolutions in the Third World that was countered by a promise of “development” to help the underdeveloped societies to catch up with the “developed”. Development was defined exclusively as economic development, reducing the degree of progress and maturity in a society to be measured by the level of its production.”

    ‘Development’ evokes organic growth, flowering and maturation, not only of the human being but of nature itself – a process inherent in the very birth of ‘new’ countries in Asia and Africa. It also smuggled in the idea that ‘underdeveloped’ countries were infants, their destiny was to grow up like those which had once cast themselves as ‘mother-countries’. Thus racism continued to dominate Western attitudes towards the countries they had dispossessed in the colonial period. The concept of ’emerging’ countries strengthened a sense of dateless non-being out of which they had come – darkness, ignorance, the womb. The association of development with ‘growth’ made it easy to identify it with constant economic expansion.

    The creation of wealth was central to the Western model. It seemed obvious that a system which could produce so much would easily abolish poverty. The accumulation of goods masked other realities – for instance, that the richest societies in the world were increasingly blemished by crime, violence, addictions, social breakdown and psychic disorder. In other words, the true cost of its version of riches did not appear in the apparent price.

    Many Third World leaders were suspicious of the change of heart of former imperialists. They sought to vary, but not to question, the basic developmental paradigm. They came up with ‘human development’, ‘indigenous development’, ‘participatory development’, building on the capacities of their peoples. A more recent form is ‘sustainable development’, which the West has re-colonized: it now means whatever the rich can get away with. Since then, ‘post-development’ has emerged, with its suggestion that we are already living in a kind of blessed afterlife.

    While development was pitted against its socialist rival, its promises remained largely in the realm of fantasy. Poor people regarded it with skepticism, concerned as they were with filling their bellies, finding shelter from the monsoon rains, clean water, healthcare and the safe passage through childhood of a new generation.

    The existence of the alternative – Communism – held the world in frozen immobility for half a century. The dissolution of the USSR, however, didn’t only vanquish the rival to ‘development’. It also called the bluff of the developmental mirage that the West had promoted. The time had come for the world to call in the promises made in the heat of rivalry. Could they be realized? Could the West deliver?

    The benefits of the Western way of wealth are not in doubt, although they remain out of reach for the majority of humanity. Everywhere in the world people have voted with their feet, seeking out the golden realms of peace and plenty. Graduates from all over the South queue up to work as houseboys or maidservants in Jeddah or Abu Dhabi, as factory labor in economic priority zones all over Asia, as fast-food servers in the have-a-nice-day culture of Europe and North America. Some have traveled in leaky boats to pick potatoes or beet in the icy winter dawns of Northern Europe or, packed into refrigerated containers and suffocating trucks, sometimes perished in pursuit of oppressive labor at destinations they never reached.

    It has seemed to more and more people that the good things promised will not come to them: these would have to be sought out in the places where they have accumulated in bewildering profusion.

    The epic migrations of our time are a response to promises of modernization and progress. Are the caravans of hope now crossing the world following pathways to prosperity, or merely tracing to its source the agent of their impoverishment? There is a severe prohibition on economic migrants, painted as the chancers and opportunists of the world, who seek to pass through barriers made porous by globalization. Suffering peoples, once lured by promises of improvement so that they should not be tempted by the doubtful attractions of socialism, now face barbed wire, No Entry signs and armed guards at the corners of closed-off avenues of global mobility.

    The flaws in the capitalist model, concealed by the glaring defects of its ideological rival, are now clearer. The West will share with the world, not its wealth but the mysteries of its capacity for wealth-creation. The messages, however, omit certain details, the most important being that the West grew rich by the exploitation of the very territories and peoples it now exhorts to follow in its footsteps. Indeed, the best-kept secret of ‘development’ is that it is a colonial concept, a project of extraction. Since most countries have no colonial possessions from which wealth may be squeezed, they must place intolerable pressure on their own people and environment. The rights of minorities are violated, the resource-base of forest people and subsistence farmers plundered to earn foreign exchange, the labor of the poor sold to the lowest bidder, ‘surplus population’ moved as settlers into ancestral homelands of tribal and indigenous peoples.

    A system of limitless economic expansion in a limited world – this is the ideology of development. It is no more capable of being realized now than it was when inhibited by the controls of socialism.

    Institutionalizing development

    Unfair development has been institutionalized. It lies in the mechanisms that ‘manage’ globalization, including the International Monetary Fund (IMF) and World Bank, the Asian Development Bank, the World Trade Organization, transnational companies and governments of the rich countries. These preach a fictitious doctrine of ‘free’ markets.

    ‘Freedom’ in the economic sphere is code for whatever advantages the world’s wealthy people. Free trade is no such thing. Poor farmers in the South cannot compete with the European Union and America, whose governments pay vast subsidies to their own food producers. ‘Free markets’, similarly, are a myth. Money moves freely around the world at a touch of a button, and some commodities may move too (subject to quotas and tariffs), but human beings (or ‘labor’, as they appear in the economic calculus) are severely controlled – as panic over ‘economic migrants’ in Europe shows.

    The IMF and World Bank were set up at the end of World War Two to help reconstruct Europe after the ravages of war. They were to provide unconditional loans to avoid economic crises and to steady exchange rates. The growth of these institutions was phenomenal: they financed infrastructural and developmental projects in the South in the 1960s, became agents for recycling the capital generated by oil price increases of the 1970s. They provided the loans to the countries of the South which created the debt crisis. The IMF moved in with structural-adjustment programs which pressured countries to export more in order to ‘service’ that debt, even if this meant increasing poverty.

    Debt is a major tool for control. The indebtedness of people of the West keeps them in line: students leaving university owe thousands of dollars for an education already consumed; people will ‘own’ their houses courtesy of a ‘redemption day’ 25 years hence. Everything, from the goods people take on credit to the pensions they hope to enjoy, ties individuals to a global financial system. How much more powerful is debt in attaching whole countries to a global order from which there is no escape!

    Under the neoliberal ideology of the 1980s (the ‘Washington Consensus’), the IMF became the enforcer of the integration of all countries into the global economy. The answer to debt was further loans and new ‘conditionalities’ – liberalizing the economy, opening up domestic markets to competition, deregulation, devaluation of the currency (to increase ‘competitiveness’) and cuts in government spending (except on arms, purchased mostly from the ‘advanced’ industrial countries). These cuts were overwhelmingly in healthcare, education, nutrition and welfare services, which impoverished people already poor. Indebted countries were also compelled to export more to ‘earn’ the money to ‘honor’ the debt. Since many compete in exporting primary commodities like coffee, sugar, cocoa, or manufactured goods like garments, shoes and toys, prices are continuously falling. They must then export more and more to earn the same amount.

    Jubilee 2000 campaigned worldwide for the G-7 and financial institutions to forgive the debt of the poorest countries: 24 million people signed the largest petition ever seen. By the end of the campaign in December 2000 it was clear that debt cancellation didn’t match the rhetoric of the powerful. The Jubilee Debt Campaign is the successor to Jubilee 2000 and carries forward the pressure on decision-makers for debt cancellation and poverty reduction. The movement has a base in many countries across the world.

    Identical programs were forced upon all countries by the IMF, increasing debt and dependency. In parallel, negotiations of the General Agreement on Tariffs and Trade became institutionalized in the World Trade Organization (WTO) in 1995. This was supposed to set up a rules-based system for implementing global compliance with a highly skewed version of ‘free trade’. Poor countries would have to open themselves up to the rich countries for agricultural imports and industrial manufactures, as well as to the service sector, not only in finance and banking but also electricity, water and power, telecommunications and the ‘cultural products’ of media conglomerates.

    The drug companies Pfizer, Bristol-Myers Squibb, Abbot Laboratories, Merck & Co, which manufacture the anti-retroviral drugs that inhibit the progress of AIDS, were major donors to George W Bush’s election campaign in 2000. At a meeting of the WTO in Doha in November 2001 it was agreed that the poorest countries be permitted to buy cheaper drugs in the interests of public health.

    The Bush Administration is pressuring countries which make cheaper versions of the anti-AIDS drugs to observe the rigorous patent laws designed to protect ‘intellectual property rights’. Despite the administration’s donation of $15 billion to alleviate AIDS, it is threatening producer countries of very much cheaper ‘generic’ drugs with economic sanctions if they export them to Africa at prices that undercut those of the main transnational companies. Jean-Pierre Garnier, CEO of GlaxoSmithKline.

    There is one rule for the G7 (richest countries) and another for the South. The G7 now preaches open economies and liberalization, as well as ‘good governance’ and ‘transparency’. Yet none of these things was conspicuous when the West grew rich. In

    Britain industrialization took place without democracy. It was constructed on the wealth extracted from empire and never had the slightest pretensions to free trade. After 1945 Japan became industrially powerful thanks to government protection for its growing industrial base.

    Most Western countries provide basic welfare for their most vulnerable, medical care for the aged, support for the long-term sick and disabled, and for those thrown out of work by cyclical or structural economic change.

    Yet the South is expected to develop without such protection. It is instructed to open itself up to organizations even more powerful than governments – multinational companies which in some cases have a turnover greater than the country in which they are investing. In 2000 the Institute of Policy Studies revealed that of the world’s largest 100 economic entities, 51 are now corporations and 49 countries. The 22 largest entities are countries, with Turkey just ahead of General Motors. After Denmark follow Wal-Mart, Exxon Mobil, Ford Motor and DaimlerChrysler. Indonesia and Greece are slightly ahead of Mitsui, Mitsubishi, Toyota, General Electric, Itochu and Royal Dutch/Shell, which are all bigger than Venezuela, Iran and Israel.

    Democracy, too, is undermined by the work of the IMF and World Bank. Over and above the welfare of people, giving priority to foreign investors and financial markets is the price paid by governments of the South for ‘stability’. Indeed, this is often a precondition of their ‘electability’. Countries like Cuba, which refuse to follow the Western model, have been the object of sabotage and continuous propaganda. Life is easier for elites of the countries that go along with the ‘advice’ offered by their Western mentors.

    After all, the interests of ruling classes everywhere coincide. The rewards from the privatization of public assets fill their pockets, permit them to travel abroad for healthcare (their own systems being inadequate), to send their children to study in the US or Europe (their own education system being run down by neglect), to own property in California or London (in case they are ever driven into exile by ungrateful electorates) .

    The World Bank and the IMF are controlled by the governments of the world’s richest countries. The G-7 together have more than 40 per cent of the directors’ votes. The US holds 16.45 per cent of the votes at the World Bank and 17 per cent of those at the IMF. Since an 85-per-cent majority is required for the most important decisions, the US effectively has the power of veto.

    The Bretton Woods Project (an organization set up specifically for the reform of the IMF and World Bank) revealed that an ‘internal World Bank report – The Effect of the IMF and World Bank on Poverty by William Easterly- has concluded that the poor are better off without structural adjustment’. The report says the poor ‘may be ill-placed to take advantage of the opportunities created by structural adjustment programs’, which suggests it is the fault of poor people themselves – for being so uneducated and unskilled.

    1. Dear Rex

      Do you want to contribute articles. It would be good.

      I will look at what you have posted and post as articles.



  4. Excellent article. Well researched and intelligently analysed. I couldnt agree more. Thank you.

    The road ahead is long and full of roadblocks. In his address on the launch of the so-called National Dialogue (and these dialogues seem to be many), the apartheid president De Klerk’s feathers were evidently ruffled as he went on a tirade against Prof Malikane on his Radical Economic Transformation ideas. De Klerk showed us that we need sound and well articulated policies and a clear roadmap to achieve the goals of RET. Lets trudge on.

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