strategy
Gaye Davis
A SEARING critique of the government’s macro-economic framework has come from the national political education secretariat of the South African Communist Party (SACP).
Published this month in the debut edition of the new left-wing journal Debate, the critique, by Langa Zita, Dale McKinley and Vishwas Satgar, amounts to a fundamental rejection of the strategy — and represents one of the first salvos in the internal debate racking the party.
They say the strategy is not a framework within which the Reconstruction and Development Programme (RDP) can be delivered and that it represents a shift to the right by the African National Congress-led government.
Noting Trade and Industry Minister Trevor Manuel’s pronouncement that the framework is “non-negotiable”, they say this “contradicts the basis of the alliance itself” and say it is imperative the SACP engage the ANC and its other alliance partner, labour federation Cosatu, on the future of the strategy. Consultation on the framework, they say, “was merely driven by the intention of dampening any misgivings of the alliance partners”.
They are also critical of government’s use of the technical skills of “mainly old order economists and the World Bank, while progressive economists in NGOs and the broader alliance were not part of the process”.
Thus, they say, it was not surprising: that the framework relies on a monetarist “trickle-down approach with growth first and redistribution subject to the cake increasing in size”.
By accepting the logic of deficit reduction and existing constraints, such a fiscal policy “serves middle and upper- income earners who benefit from tax reductions, while the working class have to accept wage restraint”.
Arguing that South Africa’s debt is low in comparison with most advanced capitalist economies and that the framework exaggerates the threat of a debt trap, they warn that the strategy’s reliance on projections of relatively strong, sustained growth and foreign investment to fund social spending and increased state investment in infrastructure means it is already in trouble: “In short the broad- based growth expected by the strategy has already faltered, and therefore in order for the government to achieve the deficit reduction targets, health and education spending will have to be restrained, mainly impacting on the poor.”
The strategy’s plans for monetary and foreign exchange policy also come under fire. Zita, McKinley and Satgar say interest-rate policy (excessively high by international standards) effects inflation only by causing economic contraction. Instead of providing for growth, it acts as a constraint on domestic investment in housing, and on small-to-medium enterprises which can’t afford loans.
And while exchange-control liberalisation is meant to create private sector investment, they say it would encourage short-term foreign investors keen only to get their money out. “Instead government policy should be directed at releasing the substantial domestic resources existing in the economy,” they say.
Zita, McKinley and Satgar argue that the absence of legislated central bargaining in most sectors will lead to increased exploitation of workers, and lower wages. The proposed social accord, hinged on wage restraint for workers while middle and upper-income salaries rise, contradicts RDP goals.
An export-led growth strategy, spurred by accelerated tariff reductions, would only bring jobs in capital-intensive, high- skill sectors and see retrenchments in labour-intensive sectors. Incentives for foreign capital would undercut local industries and reduce state tax revenue.
Written as an internal discussion paper soon after the macro-economic strategy was announced, the article represents one strand of the debate raging within the SACP.
“There are different perspectives within the party,” said SACP deputy secretary general Jeremy Cronin. “By and large there is a critical feeling in the party towards the macro-economic strategy, while among the grassroots there is a sense of frustration and anger.
“The official position of the party has not yet been elaborated. We want to keep the debate open, rather than shut it down.”
ENDS