Ebrahim Harvey
CROSSFIRE
Unlike the earlier caution and equivocation of the ruling party, President Thabo Mbeki has recently openly called for the growth of a black capitalist class in order to provide greater stability and economic growth. But what are the real prospects for this development ?
Black capitalism has arrived too late on the stage of capitalist economic development in this country to become and sustain itself as an independent and powerful entity within the economy and pose any serious challenge to or replace the domination of white monopoly capital. While history before 1994 was not on its side it appears that subsequent history is not either.
By the time of the 1994 election South African capitalism was among the most highly concentrated and centralised in the world. Five white companies controlled between 65% and 70% of assets on the Johannesburg Stock Exchange (JSE). White monopoly capital exercised a stranglehold over every sector of the economy and used racist apartheid not only to secure cheap black labour but also to exclude the development of a black capitalist class.
The industrial revolution, unleashed and consolidated with the growth of the mining and manufacturing industries, was quick, brutal and racist and completed with the rapid growth of capitalism, including Afrikaner capital, in the latter half of the past century.
However, faced with the need for serious change in 1990 a key strategic objective for white capital was the creation of a black capitalist class not only in order to save and stabilise the capitalist system but to ensure their continued control therein.
Once the African National Congress abandoned nationalisation of key sectors of the economy the way was cleared for this agenda to take off. But what has happened since 1994?
The initial flurry of politically driven black empowerment deals which very quickly captured about 10% of shares on the JSE has dropped to about 1% at the end of 1999, down from R20-billion just over a year ago to a mere R5-billion.
Has the bubble of black capitalism burst as quickly as it formed? Did this alarmingly trigger Mbeki’s recent bold call for the promotion of a black capitalist class?
According to Business Map, a Johannesburg-based institution which monitors black economic empowerment, there is little sign of a quick turnaround. It is interesting to note in which sectors of the economy most of the big black empowerment deals have been struck: telecommunications, media, entertainment and financial services.
In the most important productive sectors there has been no significant penetration of black capital and it is very unlikely that there will be any. These sectors are still exclusively in the hands of white capital and will likely remain so. It is impossible for the economic playing fields to ever be levelled, especially at a time when mergers and takeovers worldwide proceeds at a frantic pace.
The 1997 JSE crash hit black empowerment deals very hard, and they have yet to recover. That was the first serious blow the emerging black capitalist class experienced since 1994 and it highlighted their greater vulnerability to the harsh realities of globalisation, compared to their white counterparts who have over a long period built up enormous capital, resources and experience, all of which the small black capitalist class lacks.
Unlike the growth of Afrikaner capital earlier, which was strongly supported by various state corporations, the state today cannot do much to support black capitalism when it is shedding its assets to market forces. For aspiring black capitalists yesterday it was apartheid which was their biggest obstacle, and today it is that legacy and the competitive storms of globalisation which hinder their progress.
The earlier eagerness of white finance capital to heavily leverage black empowerment deals has given way to a much more sober, cautious and realistic assessment of growth prospects. It appears that the honeymoon period of 1995 to 1998 is over, as it was inevitable that the initial artificially overrated prices could not be indefinitely sustained, especially in the wake of the market crash of 1997. Black capitalism and its expansion would henceforth have to pay its way, which will not be easy.
But what is the other side of the coin of black economic empowerment, which has in real terms been largely black capitalist empowerment? A sombre picture indeed.
According to Business Map structural inequalities between “race groups” have not dramatically changed and the heights of the formal economy remain exclusively in white hands. Although some black people have moved into entrepreneurial activities there has been no significant filtering down of benefits to ordinary people. What clearly emerges from this situation is that the little redistribution of wealth which has taken place has only benefited the black middle class in skilled, supervisory and managerial jobs and mainly the tiny big black business elite who have become millionaires overnight.
Not only has black economic empowerment failed to narrow the gap between extremes of poverty and wealth generally, it has, because of its black middle- and capitalist-class bias, widened the gap between these classes and the impoverished mass of black people and thereby deepened class distinctions in the black community.
What is particularly revealing is how the ANC during the anti-apartheid struggle leaned heavily on the black working class as the main force of the liberation struggle but today, after achieving political power (not economic power), mainly through the black working class vote, it instead fosters the growth of a black middle class and capitalist class when the material conditions of the working class worsen daily.
In terms of the development of the productive forces of the economy the small black capitalist class, mainly situated in the soft sectors of the economy, cannot play a historically progressive role at this late stage in our history.
A critical example is job creation. Instead of creating jobs, black empowerment deals have largely shed jobs and top managements have been as ruthless as their former white masters in labour relations, pursuit of profits and self-enrichment.