Labour union federation Cosatu in March last year threatened to go on strike against the value-added tax increase, the first hike in VAT in more than a decade. Two months later ANC secretary general Ace Magashule pounced on this decision and called on ANC members to join workers in protesting against the VAT hike — despite the hike being instituted by his party’s government.
It was one of a string of examples mentioned by alliance leaders this week in which Magashule —seen as the face of the remnants of the state capture and corrupt grouping in the ANC — had “vulgarised literature” from the left to further the ends of his faction.
Union leaders, who wished to remain anonymous, this week said the economic and political situation is so fluid that a “realignment” of political forces is entirely possible.
The hijacking of leftist rhetoric by the Magashule grouping has placed Cosatu and the South African Communist Party (SACP) in a sticky situation. The alliance partners reject the “populist demagogues” who have appropriated the left’s language and rhetoric, yet want to push the ANC towards adopting their policy proposals.
The fact that the likes of Magashule have sharply raised amending the ownership and the mandate of the South African Reserve Bank — policy positions long agitated for by the left — should not mean shutting down the debate, argues SACP central executive committee member Jeremy Cronin in an interview with the Mail & Guardian.
Cronin says there was a danger that critical discussions were being hijacked by a “parasitically linked state capture bunch”. But the debate had to be had and was already being embraced by rational thinkers inside and outside the alliance. He says: “We have to have a rational debate … we cannot be reckless.”
The left should navigate the space by, on the one hand, constantly calling out and criticising these “toxic forces” and recognise that this group is not a “useful battering tool” for the left to get what it wants. On the other hand, he says, a rational debate about the role of the Reserve Bank should be welcomed.
Cronin says a 2010 letter from former finance minister Pravin Gordhan to the Reserve Bank governor at the time, Gill Marcus, calling on the bank to take factors such as unemployment into account indicates that thinking about the rigidity of monetary policy has been prevalent for many years. Whereas Marcus was more amenable to the call, current Reserve Bank governor Lesetja Kganyago is not as flexible.
Although Kganyago’s term ends in November, it is worth looking beyond an individual and perhaps amending legislation such as the South African Reserve Bank Act to include shared and sustainable growth, Cronin says.
His comments are echoed by the co-director of the Institute for Economic Justice, Neil Coleman, who has been arguing in favour of a radical shift in thinking about the economy. The newly formed institute describes itself as a “progressive think-tank” aimed at providing “policymakers and progressive social forces in South Africa and the region with access to rigorous economic analysis and coherent policy options”. He was a researcher at Cosatu but left the federation in the aftermath of the expulsion of the National Union of Metalworkers of South Africa and then-general secretary Zwelinzima Vavi.
Coleman argues that South Africa lags behind debates taking place internationally about macroeconomic policy.
On the Reserve Bank he too believes a more fundamental shift than new personalities was required at the helm of the central bank.
Coleman punts an approach including a macroeconomic stimulus and investment package which would not be done within an austerity framework such as the stimulus package proposed last year by President Cyril Ramaphosa but should include “stimulatory expenditure” such as infrastructure projects as part of a three-pronged approach to build an economy “for the many, not for the few”. He argues that monetary policy should be revisited because high interest rates choke economic activity. He too argues in favour of a mandate change for the bank through amending legislation.
Coleman acknowledges the difficulty in having a rational debate when one is attempting to counter “predators” who have pilfered ideas for their own ends. This group has resonance, he says, because it has hijacked genuine policy debates that have taken place in the ANC-led alliance for decades.
Cosatu has taken a less cautious approach to the debate about the Reserve Bank and a number of other economic policy issues, despite the federation being at the heart of the campaign to propel Ramaphosa to the presidency.
Last week, amid the attacks and counter-attacks in the Reserve Bank debate in the ANC, Cosatu welcomed Magashule’s comments and rounded on Finance Minister Tito Mboweni, claiming he was “conflicted” on the bank issue because he was a shareholder of the bank.
While Cronin has described the debate about the ownership or nationalisation of the bank as a “stupid debate” and a “red herring”, Cosatu believes the state should do away with private shareholders in the central bank. Cronin says shareholders have no say over the mandate or monetary policy and, in fact, many shareholders want to be bought out.
Cosatuwants the Reserve Bank’s mandate changed to include unemployment.
Of the left forces in the alliance, the federation is most susceptible to siding with the state capture/corruption faction, should this grouping provide it with a pathway to see its long-held economic posture realised.
It has been clear since Ramaphosa took office that there would be no honeymoon period for him — austerity measures, retrenchments in the state and selling off state-owned companies are among the interventions that could push Cosatu to rethink its support of the president, say insiders in the federation.
The realisation that the Magashule faction in the ANC was using the left’s “literature” as a factional tool and “vulgarising it” had been discussed in the corridors of Cosatu’s larger unions since 2017.
The federation treaded carefully at first but now that the elections are over it is clear that Ramaphosa is an “unreliable ideological ally”, according to a union leader who wished to remain anonymous.
For Cosatu it is also a matter of survival — workers are becoming impatient with its inability to influence the ANC after the elections and this may well push the federation towards aligning with the Magashule faction.
“The ANC needs to appreciate that workers did not give it a blank cheque but it’s the progressive tone of the manifesto that convinced the working class to give it another chance.The manifesto generally represented a significant shift to the left on economic policy, as reflected by a heavy emphasis on employment creation and equity,” Cosatu said in a statement after a meeting of its top brass following the elections.
Much will depend on Ramaphosa and the manner in which he both consults and communicates with the federation.
“There is no honeymoon period for President Cyril Ramaphosa and his sixth administration. The working class is running out of patience and we expect bold and decisive leadership in fixing the country,” Cosatu said in the statement.
The federation’s comments indicate that a realignment of power away from the Union Buildings and toward Luthuli House — with all its state capture and corruption baggage — is by no means off the table.