My route to work is a congested N2 city-bound. The far-right lane is marked “bus only”. Nice idea. But even the buses ignore it. It’s on the wrong side of traffic for the on- and off-ramps. Along this particular stretch the N2 has three lanes. In practice, the minibuses, ducking and weaving and making space for each other, have created their own left-margin fourth lane.
The eminent Peruvian economist and recent guest of South Africa’s Treasury, Hernando de Soto, would probably appreciate this conjured-up fourth lane. For the past decades De Soto has been researching the “extra-legal” in the Third World.
Third World extra-legality, he writes in The Mystery of Capital, “is often perceived as a ‘marginal’ issue similar to black markets in advanced nations, or poverty, or unemployment … In fact it is legality that is marginal; extra-legality has become the norm. The poor have already taken control of vast quantities of real estate and production.”
De Soto’s interests and sensitivities are pertinent to what I think is becoming the most important socio-economic debate in South Africa. The debate was launched by President Thabo Mbeki in his February 2003 State of the Nation address. He noted the persistence in our society of a “second economy”, characterised by poverty, marginalisation and underdevelopment.
Recognition of this polarised reality is critical. But is our “second economy” a disappearing legacy of an apartheid past? Or is it being actively reproduced in our present? What are the strategic objectives of our interventions into the “second economy”? Are they designed to promote the “second” into the “first”? Is that possible? Or even desirable?
During his recent visit to South Africa De Soto repeated his well-known views. He told a South Africa Ten Years On conference that the poor are the owners of vast untapped capital. However, it is “dead” capital, dwellings and micro-enterprises that are unrecorded, property that cannot be used as collateral in the capitalist market. Comprehensive property records are the secret of capitalism’s success in the West. The vast sea of unrecorded, extra-legal assets in the Third World is the reason for capitalism’s failure here.
De Soto’s work is important because it forces us to look at our own social realities, to appreciate that they are not uniquely South African. See our generic Third World reality, he says, “armies of vendors hawking wares in the streets, glimpses of bustling workshops behind garage doors, and battered buses criss-crossing the grimy streets”.
In the end, however, De Soto’s prescriptions lead us off in a problematic direction. Despite his celebration of the “second” economy, it comes to be defined by what it is not. He quotes Foucault approvingly that to understand sanity we should study insanity. This becomes the fundamental organising principle of De Soto’s argument, the “insanity” of the Third World (the fourth lane on the N2) helps us to understand the “sanity” of the West, the secret of its prosperous and ordered capitalism.
This begs many questions. Is the West successful, or is its current accumulation path humanly and ecologically unsustainable? Can the United States’s level of energy consumption, or its parasitic and burgeoning trade deficit, be maintained?
To frame the same question another way, is the “success” of the West not predicated on the plundering of other societies through slave trade, colonial dispossession and unequal trade? And have these historical underpinnings, what made the West West and the South South, not been accentuated over the past two decades through debt “management” and enforced structural adjustment?
Which reminds us of another set of realities skirted by De Soto. He tends to assume that the “second economy” is peopled by newly urbanising rural folk, micro-accumulators in search of entrepreneurial opportunity.
Certainly the squatter camps that surround the cities of the South are populated by millions of families squeezed from their land by ecological disaster, war, plunging global commodity prices, and agricultural subsidies in the North.
But squatter camp inhabitants —now one-third of the world’s urban population — are also drawn from more urbanised families that are pauperised by de-industrialisation following International-Monetary-Fund-enforced liberalisation; former teachers and municipal workers hit by the rampant downsizing of public sectors; and a working class that is forced to be flexible, casualised and outsourced. This is all well documented in the comprehensive United Nations-Habitat global survey, The Challenge of the Slums (2003).
The capitalist market is not a zone of freedom to which the poor have yet to gain admission by having their pitiful property adequately registered in the Deeds Office. Third World peasants, retrenched workers, downwardly-mobile middle strata have been marginalised precisely by their exposure to the global market.Â
The zone of the extra-legal, with its myriad community and household survival strategies, should not be mythologised, certainly — but nor should we ignore its role as refuge and shock- absorber. The spaza shop and the women’s baking cooperative are household and community insurance, relatively de-linked from the consequences of the rand-dollar exchange rate.
The marginalisation of the “second economy” is a problem, but also part of a solution. It is an anti-systemic terrain, where social needs might be prioritised over the rigours of profit accumulation and global competitiveness. De Soto’s recipe — promotion of the extra-legal into the capitalist market by way of the Deeds Registry — is a naive, even dangerous, mirage.
Jeremy Cronin is an African National Congress MP and deputy general secretary of the South African Communist Party