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Greeting … and compliments of the season to you all.

I was too busy to post here during the last few months of 2014.

I had been writing and then road showing (here and abroad) an argument that suggested pressures acting on the ANC might, ultimately, save the organisation from its slow-motion collapse into what can best be described as a kind of criminal conspiracy.

On the whole, as they say, it was a deliberately positive counter to the life draining wails of despair that were starting to keep me from my sleep.

In the ANC there are thousands of pockets of resistance, but the overall character of the organisation and the way it has embedded itself with the state is deeply reminiscent of a huge wasp I watched yesterday stun an even bigger spider, implant it’s eggs in the juicy arachnid abdomen, stuff the bundle in a piece of dry cane, where the baby wasps will soon hatch and begin eating the spider in a precises way that keeps the host alive long enough for the new crop of wasps to fly off to carry on the business for which they were born. I believe some of such wasps are able to mess with the spider’s DNA in such a way that the spider will spend its last dying moments protecting the baby wasps.

This is an almost perfect metaphor for the behaviour of the hijacked centre of the ANC.

But I don’t think that is the whole – or even main – story, and below is the introduction to a longish report I wrote in October last year with my colleagues, Joan Tshivhinda (quantitative analyst) and Jeff Schultz (economist), that argues we have a better than even chance of being in a much improved situation by …. about 2020. That the pressures acting on the ANC could powerfully reshape the organisation for the better.

This is purely the introduction to the document. Joan did lots of quantitative work on the 2014 elections and Jeff did the same for the definition and class structure of SA society – so I think I am going to need more direct permission from BNP Paribas Cadiz Securities to publish the whole thing, but I hope to do so soon.

But for now:

Introduction – Against a Dark Background

(That title was made up purely for the blog post … the original title was “SA Political, Quantitative & Economic Research – emerging middle class lights up the gloom.)

There are significantly more important forces shaping our politics than the bad behaviour of our politicians.

  • Deep within the electorate a rapidly growing black African middle class is beginning to shape political and economic outcomes more profoundly than the size of the group implies.
  • We believe this group will determine many major outcomes for our politics and economics in the next few years.
  • Emerging from our analysis is a first (and best) case scenario in which the ANC goes through a process of renewal and recalibration over the next few years, powerfully reclaiming the defecting black African middle class and rolling out economic policies that will be optimum for financial markets and business.
  • However, we also describe several significantly threatening alternative scenarios, including further splits in the ruling party, the African National Congress (ANC) slipping below 50% of the national vote and losing the major metropolitan areas, the centre of opposition shifting toward some combination of the Economic Freedom Fighters (EFF) and the emergent socialist party… and even more gloomy potential paths we could, with a low probability, travel down.

Many institutions of political representation in South Africa (most obviously political parties and trade unions) are undergoing turmoil – within themselves, in competition with each other and in rapidly changing levels of popularity.

here are various methods we can use to seek to explain the turmoil. Much of the mass media focus has been on the character and integrity of the President (of the ANC and the country) Jacob Zuma, and his allies – and we attribute much of the turmoil to the Zuma camp’s alleged attempts to capture a lion’s share of available rents and patronage – and to keep their principal out of the courts. While we do not deny the role of individuals (as heroes or villains) in shaping history, we think it obligatory to examine changes in the deep structural features of society, especially in processes of class formation, and the changing needs of production, to seek explanations for the changing face of our politics.

Our basic premise is that ‘class formation’ among black Africans was held back by apartheid, and the legislation and state that defined that system. But in the 1960s and 1970s the global economy began to shift in its character, and in its requirements of the function of labour, goods and capital markets. In South Africa the economy shifts toward services and manufacturing and requires a more settled, urban, educated workforce, the members of which are able to purchase the goods and services being produced by the new economy.

For the first time in almost 100 years, black South Africans could realistically aspire to be urbanised, settled, housed, better educated and able to afford the goods and services of the new economy. And this set the emerging class powerfully against the political system of apartheid that understood its survival and the survival of white dominance depended on the defeat or diversion of these aspirations.

It is more useful and has more explanatory power, to understand that underlying the campaigns of resistance and repression and the attempts by the apartheid government to rejig its systems that controlled the movement, work prospects and political aspirations of black people were the reasons for the inexorable rise of the black African middle class.The 1976 uprising, the formation of the UDF in 1983, the formation of Cosatu in 1986 and its clear alignment with the still banned ‘Congress Movement’, the strikes, the school boycotts, the growing campaign for international isolation, the rapid reappearance of ANC symbols, leaders and flags in South Africa in the mid-1980s, the escalation of the ‘armed struggle’ and then the unbanning of the liberation movements, the release of leaders, the tricky negotiations at Codessa (Convention for a Democratic South Africa) 1 and 2 and finally the first democratic election in 1994 – could be seen to have been caused, orchestrated and guided by wise leaders and clever tacticians from both sides. And we don’t believe that statement is wrong, but we do think it misses the main point.

The apartheid state tried everything to head off the rise of the Africa middle class:

  1. the ‘hearts and minds’ campaigns in black communities – which only at its most trite consisted of giving out copious amounts of sweets and propaganda from the top of armoured vehicles;
  2. the attempt to establish a Tricameral Parliament to give political representation to Coloureds and Indians and the vigorous attempts to build the Bantustan[1] administrations and promote the system of local black councils[2] – attempting to ensure that ‘the oppressed’ would not find unity in opposing the regime – and ensuring that black African aspirations were diverted to stony ground and
  3. the campaigns of repression, including raids into neighbouring states, troops deployed into townships and state-funded assassinations squads and other ‘dirty tricks’ campaigns.

The not so subtle point we are trying to make was this was all actually driven by the African middle classes struggling to come into being (led and ridden by various political formations) and held back by the apartheid state and legislative regime. Thus, the emerging black middle class was both the engine and the prize of the contest between the liberation movement and the apartheid regime.

We draw theoretically on both the Weberian and Marxist definitions of class. With the defeat of the apartheid state, long suppressed class formation and differentiation has exploded in black communities. We attempt to describe and characterise the black African middle class (possibly classes) using a mixture of methods:

  1. Our classification has a minimum per capita income threshold which will be significantly above the middle of the income distribution for black South Africans;
  • We will show the group is the fastest growing segment of the Living Standards Measures (LSMs) table since 1994 and we will argue that it is politically influential and powerful beyond its numbers, consumption power and voting preferences;
  • Finally our definition will include the fact that members of the group will be more likely to have tertiary education (or professional or technical qualifications) and be more likely to live in Gauteng.

If we conceive of our political parties, electorate and the interplay of powerful other interests as part of a complex ecology with eco-niches and selective Darwinian pressures, then much of the turmoil in the ecosystem (the formation of the EFF, the torturous debates about affirmative action in the Democratic Alliance (DA), the splitting off from Cosatu of the National Union of Metalworkers of South Africa (Numsa) and the formation of some form of socialist alliance, the details in the drop in support for the ANC in this last election, the extreme anger about Jacob Zuma’s alleged diversion of public assets, his attempts to avoid the law and avoid various forms of constitutional curtailment) can best be explained by the growing assertiveness of the class we describe.

We overlay these categorisations with a close examination of the fact that the African National Congress lost approximately 11% of the national votes it won previously from across the geography of the urban black African areas of South African industrial heartland of Gauteng in the May 2014 general elections. We point out that in areas that were more representative of the middle class we defined above, these losses were greater.

We conclude that the pressures being brought to bear

  • could split the ANC further;
  • could drive the party further toward its flirtation with a sort of rural populism driven by patronage and traditional patriarchal authority;
  • could drive the party further into the hands of the South African Communist Party which has been the main beneficiary of the rise of Jacob Zuma; and
  • could provide space for the EFF, the DA and Numsa’s in potentia socialist party to grow to the point that the ANC drops below 50% vote.

We hope/predict that the middle classes and the Gauteng ANC, as the part of the party most exposed to the middle classes to which we refer, is already in the process of preparing to draw the party back from the brink it is approaching. The Zuma faction is entrenched, but it is our belief that the brand value being lost under his leadership will inevitably lead to a correction.

In general, our conclusion will be that the negative political consensus about South Africa is overdone, because attention is not being given to the deep, underlying structural drivers of change in the country, namely the coming into its own of the black African middle classes.

How history works – the origins of the black African middle class and what really caused apartheid to fall

Change in the structure, priorities and labour processes of the global economy began to accelerate in the 1960s and 1970s with a relative shrinking of primary resource extraction and heavy industry. South Africa, like much of the rest of the world, experienced relative growth in the manufacturing and services sector.

Nicslondonslides2

Thus the economy began to require a settled, better educated and skilled labour force, and one that could procure the goods and services produced by the new economy.

Black South Africans could, for the first time, realistically aspire, as a group, to be more settled, housed, better educated and be the consumers of certain goods and services to which their parents had had no possible access. Thus their interests melded with the similar interests of the already existing black African middle class that had managed to take root in the stony apartheid ground.

This nascent middle class had long been deliberately stunted by the apartheid state – and certainly segregated – to keep it from competing with its white counterparts, but in the views of Nzimande[3] (yes the very same one[4]) quoted in Southall[5], the group could be broken down into the following categories:

  1. The bureaucratic petty bourgeoisie – basically officials tied closely to the central apartheid state, but also town and city administrators and in the Bantustans (reliable allies of the apartheid state in Nzimande’s view);
  2. The civil petty bourgeoisie – civil servants and state employees like teachers, nurses and clerks – and from whose ranks Nzimande argues was drawn much of the leadership of the national liberation movement (clearly entirely unlike the bureaucratic types mentioned above);
  • The trading petty African bourgeoisie – which Nzimande eccentrically orders into several groups based on their ability to align with the liberation movement, but concluding that those belonging to the National African Federated Chamber of Commerce (NAFCOC), while clearly pro-capitalist, were useful allies to the liberation movement.
  1. The corporate petty bourgeoisie – basically black employees in major companies which, since the early 1970s, had “sought to legitimise capitalism through the discourse of the ‘free enterprise system”. In Nzimande’s views (as summarised by Southall) this group was “simultaneously hugely frustrated by limited opportunity and white managerial racism, uneasily situated as it was between capital’s attempts to create a black middle class and white management’s defence of its own class interests”.

The point of all of this is that almost all academic research agrees that there had been an “enormous increase in the African middle class between 1960 and 1970” Harold Wolpe in Southall 1977) “indicating the growing upward mobility of blacks into clerical, technical and non-manual jobs and of Africans into skilled employment”. (Southall) [6]

There are two observations that are worth making:

  1. The group definitions in the literature do not distinguish between skilled and upwardly mobile workers and the classes of traders and small business owners and civil servants.
  2. Because the definition is loose the group appeared almost impossible to count, with Samuel Nolutshungu (1983) estimating 121,948 members of the black middle class by 1970 and Wolpe (1974) putting the number at 1,315,800 for roughly the same time.

However, for our purposes here these are not problems because our argument is that, under the heel of apartheid, was growing a class of people whose expectations were realistically rising and this led to rapidly heightening political resistance.

At the height of apartheid, the oppression faced by all black South Africans, and especially Africans, was the political basis for downplaying growing class differences and it appears to us that the sense that change was possible, that the aspirations were realisable, was a multiclass phenomenon among all black South Africans.

It would be equally difficult to describe the sophistication, brutality; or give a proper timeline of the apartheid state’s attempt to survive the onslaught – and the consequences of its failure to do so.It would be impossible here to adequately describe the growth and momentum of resistance in the 1970s and 1980s. From the massive strikes in Durban in 1973 through the 1976 uprising, the campaign to defeat the Tricameral Parliament from 1983, the strikes, the bombs, the stay-aways, the States of Emergency from July 1985 and the growing criminalisation of any form of opposition – the profound growth of international solidarity for South Africans who were living under apartheid – and rising costs of resisting and defending the system.

However, for our purposes, it is interesting to examine one aspect of the state’s reaction when it realised how rapidly and powerfully black expectations were rising in the 1970s with the changing requirements of the domestic and global economy.

The Wiehahn Commission submitted an interim report to Parliament in May 1979 which recommended:Under pressure from South African and global businesses, especially after the Durban strikes in 1973 and the uprising in 1976, the National Party government made a serious attempt to reform the industrial relations system and the linked system that governed the rights of black Africans to move from place to place (influx control).

  1. Legal recognition of Black trade unions and migrant workers
  2. Abolition of statutory job reservation
  3. Retention of the closed shop bargaining system
  4. The creation of a National Manpower Commission, and
  5. The introduction of an Industrial Court to resolve industrial litigation[7]

The Riekert Commission reported at about the same time and recommended:

  1. Black workers already in urban areas with the ‘requisite permission’ to be there should receive ‘preferential treatment’ in finding employment – and thus create a stable labour force and encourage a “Black urban middle class”[8]
  2. Other Black workers could be removed after 72 hours of looking for work in an urban area and influx control would be tightened.

It is not our purpose and beyond our ability to explain the complex mechanism by which the apartheid legislative regime and its state pursued its ends but what is noteworthy for our purposes here is that National Party strategist and securocrats understood what was happening and they attempted to accommodate and divert the force that was coming at them, namely a rapidly growing group of politically marginalised, controlled and subjugated people who had seen the possibility of a better life and were prepared to struggle for it.

What happened in the 1970s and 1980s and in South Africa would have been strongly predicted in a piece of academic work presented by US sociologist James C. Davies in 1962: Toward a Theory of Revolution” in the American Sociological Review, (27)1 5-9.

We have deliberately left out the role played by individuals, organisations and leaders in building political and military resistance, in mobilising the majority into defiance and then in skilfully negotiating a peace, a new constitution and democratic country.Simply put Davies argues that in societies where expectations of improvement in the conditions of life begin to rise, they inevitably outstrip the real improvement. Finally daring to hope for the removal of influx control and the right to live and work where they chose, black South Africans instead got the mean-spirited liberalisations of the Wiehann and Ricket commissions – and the revolts driven by an unacceptable gap between expectations and reality followed as night follows day.

Nicslondonslides

It is our contention that what broke apartheid, with its laws, its state, its political parties, its cultural institutions, its security apparatus and its ideology was precisely its attempt to dam the flow of people’s rising aspirations – and we are still in the catastrophic flood of that dam having burst.We have done this because we want to emphasise that the deep and powerful historical forces of class formation and economic change tend to drive politics, not the other way around. The best politicians are those who realise these limits, who really understand that their profession is the art of the possible. One may slightly divert and shape the torrent but one’s power is strictly limited.

The Black African middle classes today – an introduction

In this sense the pressures that built up against the apartheid edifice are the same, and the same energy is driving South Africa into the future. It is the long suppressed black African middle class, having steamrolled apartheid out-of-the-way and now moving through our politics and economy with the same irresistible power… and its expectations continue to rise.But again, while we think these programmes have obviously had a major impact – and are likely to be tightened up – the real ‘explosion’ and driving force have been the aspirations of ordinary people who have long been denied the opportunity to seek to the good life, to educate their children to higher levels than was open to them and to accumulate assets. The ANC government has opened the doors, but it is impossible for those doors to be opened wide enough and it is essentially a market force that causes people to push, shove, clump and burst through the crumbling entrance as fast and as far as possible.The formal removal of apartheid legislation in the 1990s, the deliberate and vigorous and largely successful attempts to change the demographics of the state and civil service, including that of the major parastatals, a host of legislation designed to pressure private companies to put equity in black hands and to appoint black senior managers, the use of licensing in the minerals sector and, importantly, the use of state expenditure to promote black entrepreneurial activity have been important pillars of government policy and have undoubtedly been major forces in promoting a black African middle class.

Apartheid, among its myriad impacts on the shape of South African society, suppressed ‘normal’ class formation and segmentation among the black population. It was, in fact, and for a long time, a systematic attempt to do just that – so as to protect whites from the competition.

We have described in the previous section how various black African middle-classes as well as upwardly mobile sections of the working class emerged despite the best efforts of the apartheid system.

[1] A Bantustan was the cornerstone of the system: black people were allocated (often arbitrarily) to one of 10 territories where they would live and be politically represented. The idea was to concentrate members of particular language or ‘ethnic’ groups in these places and black people would eventually only be in ‘South Africa’ as migrant workers from these homelands. Four of the homelands, Transkei, Bophuthatswana, Venda and Ciskei were declared independent, but this was never recognised outside South Africa.We concluded, however, that the apartheid system was destined to fail as soon as the economy required something different from black South Africans and black South Africans could therefore realistically aspire to something different.

[2] A major social project defined in the Black Administration Act 38 of 1927 – endlessly amended to promote the co-optation of influential individuals in the black community – that in turn led to the burnings and killing of such councillors, most notably through the infamous ‘necklacing’ (placing a burning tyre around the victim’s neck).

[3] Nzimande, B. (1990). ‘Class, National Oppression and the African Petty Bourgeoisie: The Case of African Traders’, in Robin Cohen, Yvonne Muthien and Abebe Zegeye (Eds), Repression and Resistance: Insider Accounts of Apartheid. London; Melbourne; Munich; New York. Hans Zell Publishers: 165-210.

[4] Blade Nzimande is General Secretary of the South African Communist Party and has been since 1998.

[5] The ANC and Black Capitalism in South  Africa, Prof. Roger Southall, Democracy and Governance, Human Sciences Research Council Seminar 2003/23

[6] The ANC and Black Capitalism in South  Africa, Prof. Roger Southall, Democracy and Governance, Human Sciences Research Council Seminar 2003/23

[7] From the excellent South African History Online, a non-profit resource: http://www.sahistory.org.za/dated-event/wiehahn-commission-report-tabled-parliament (accessed 10/24/2014 19h54)

[8] http://www.sahistory.org.za/dated-event/recommendations-riekert-commission-investigate-employment-conditions-black-workers-are-t (accessed 10/24/2014 19h54)

I am an independent political analyst focusing on Southern Africa and I specialise in examining political and policy risks for financial markets.

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