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ON THE ECONOMIC CRISIS AND LOCAL GOVERNMENT
HERBERT W. VILAKAZI*
(*Special Advisor to the Premier of KwaZulu/Natal; Johannesburg, 18/8/05)
It is important to stress that the historical factors which produced and shaped South Africa are the same factors which shaped other countries of Africa. There are differences between England, France, Germany, Italy, the USA and Canada, but they remain industrial capitalist societies; similarities are more striking than the differences among them. It is the same with African countries. The impact upon African societies, and upon the minds of Africans, of capitalism, of the African Slave Trade, imperialism, colonialism, racism, the Russian Revolution, the dominant role of the USA in the world, and of the Bretton Woods institutions, has left African societies largely similar, in spite of their differences. There is no South African exceptionalism.
The largest part of Africa, including South Africa, is the site of growing impoverishment and failure of development policies. What is the cause of this Africa-wide phenomenon?
The economists advising our leaders have ignored a basic principle of elementary economics. A market economy needs commodities and buyers of commodities. There must be consumer demand for commodities, and buying power possessed by those demanding the commodities. The dynamism of a market is determined by the size or scope of demand for commodities, and the size and extent of buying power possessed by the majority members of society.
An axiom of US economics is that the consumer demand and buying power of the majority members of US society is the driving engine of the US economy. The World Bank and IMF long ago said that the weakness of the South African economy is the smallness of its domestic market. Why is it small? There are historical reasons for that: racism, which only developed a small sector of the population of the country –Whites, resulting in what Guy Mhone called “enclave” economies; job reservation; migrant labour system; colonialism; the impact of capitalism and imperialism on colonized and semi-colonial societies. This resulted in the development of Whites (tiny section of society), on one hand, and the underdevelopment of the overwhelming majority of society, the African population. This resulted, among other things, in the economic ruin of African rural communities. This is the nub of the problem of the capitalist economy in Africa: the overwhelming majority of society are poor, starving African people in underdeveloped rural areas. This majority section of society is not an able participant in the country’s market economy. This is what constitutes the smallness of the domestic market, which the World Bank and IMF call the weakness of our economy. This applies to the entire African continent. The biggest challenge to government and elites is to adopt policies which shall result in increasing the size of the domestic market, by incorporating within that market the majority members of society who live in rural areas, the majority members of society currently not fully active within the market economy. We need to create a truly national domestic market. Then we shall have a truly growing and developing economy. Eliminating hunger and developing rural African and Coloured communities shall create an extended market for products from cities and towns, adding dynamism to the entire national economy.
Our failure to eliminate the underdevelopment and poverty of African rural communities is now the heavy drag that is pulling down the entire economy of the nation. Our failure to eliminate underdevelopment in rural areas of Africa is the roadblock to economic development in the country and in the continent. This is the primary cause of stagnation in our economy. The problem is wrong economic policies inside the country and continent, not international economic competition.
The failure of African governments to encourage and spear-heard the initiation of the African Agricultural Revolution has resulted in a food crisis in Africa, which has produced Africa’s health crisis. Domestic food production for domestic needs has declined in most African countries; these countries find themselves dependent upon food imports; and food prices have risen steeply. Traditional African diet systems have been disrupted, and gross imbalances and insufficiencies in food intake have occurred. This has had terrible results in the traditional health system.
THE IMMUNE SYSTEM OF AFRICAN BODIES, WHICH WAS BUILT UP OVER CENTURIES UPON CENTURIES, HAS BEEN DISRUPTED OR ADVERSELY AFFECTED, IN MOST CASES, OPENING CHANELS FOR THE INFECTION OF THESE BODIES BY A HOST OF NEW AND TERRIBLE DISEASES, including HIV/AIDS. We are talking here about a dire threat to the lives of tens and hundreds of millions of human beings.
The crisis of poverty in rural areas is forcing millions of Africans to move to towns and cities. The problem, however, is that this is urbanization without industrialization. The average person of working age in current African towns and cities is not employed in industry or manufacture. These masses of urban people are neither the industrial working-class, nor workers in the service sector of the economy. More and more, these people would fall under the category of the lumpen-proletariat. The small formal industrial and commercial economy that exists has no space for these millions of African people. These millions of African people in current African cities and towns simply hustle for existence. A sense of insecurity penetrates deep inside the minds and hearts of these millions of men, women, and youth.
These cities and towns do not have the appropriate infrastructure of housing, schools, hospitals, and employment, to absorb these millions of people. The so-called informal housing emerges, and crime, and diseases, and all sorts of social pathologies. There emerges the syndrome of poverty, unemployment, and crime in the inner cities. The tax-base of municipal councils and city governments shrinks or virtually disappears. A fiscal crisis of government emerges, which results in diminished funding for social services, and for the construction and maintenance of roads, houses, schools, universities. Libraries, health facilities, police services, etc. This is the impact of the current economic crisis upon the capacity of local government to deliver services to masses of society people.
In the history of the West, the Industrial Revolution was preceded by the Agricultural Revolution; Africa has not had her Agricultural Revolution. The prelude to the successful emergence of capitalism in the West was a major transformation of the European countryside. The development process in the African countryside has not occurred.
The economists advising our leaders have, in general, turned the gaze of our leaders away from these facts. Since Africa began her modern history as independent countries, her leaders, governments, and elites, have failed to bring about rural development, at the centre of which should have been the initiation of the African Agricultural Revolution. This is the only sound foundation for the proper development of Africa. Even in the process of pleading for international support and funds for Nepad, there is no prioritization of plans for the initiation of the African Agricultural Revolution. We should not be talking about piece-meal, ad hoc projects in rural areas: we should be talking about comprehensive, integral plans and activities for initiating an Agricultural Revolution encompassing the entire continent.
At the recent meeting of Heads of States in Abuja (June 2005), our leaders made a call for billions of dollars for the construction or development of “infrastructure”.
Developed Western economies are a unity of developed agriculture, developed industry, commerce and banking and a developed labour force. Of course, this unity has not been without conflicts. The important point is this: when we learn that less than 10 per cent of the labour force in the US or England is in agriculture, we should not jump to the wrong conclusion that agriculture loses its importance as the economy develops. Samir Amin has remarked that the development of Western economies rested upon a permanent agricultural revolution: “…large-scale mechanized industry was supported by a permanent agricultural revolution…” (Amin, Samir, Capitalism in the Age of Globalization, London, Zed Books, 1997, p. ix)
The food industry is one of the largest industries in the developed economies of Europe and North America. (Mandel, Ernest, Late Capitalism, London, Verso, 1978, pp. 378-383) Agriculture is the only sector of the economy of industrialized Western countries which receives outright grants (subsidies) of billions of dollars every month. That is how important agriculture is to the US government, as well as to the governments of the EU. They take as much care of the agricultural sector of their economies the way one takes care of the apple of one’s eye.
In our case, infrastructure development (highways, harbors, airports, electricity, etc) must go hand in hand with the initiation and development of the African Agricultural Revolution and rural development in general. The stress on the former, without the latter, shall result in “white elephant” infrastructures, which cannot be sustained and maintained. If you construct a modern highway from one end of the country to the other end, the assumption is that there are enough cars to use that highway, and, above all, that the people using that highway have enough money to pay the taxes and tolls for the maintenance of that highway. “Infrastructures” must have a mass base for sustenance, consisting of a developed population.
Our leaders are not advised correctly by their economists, whose mindsets are firmly rooted in the industrialized Western economies. What seems uppermost in the minds of these advisors is to link Africa with the “world economy”. The point lost in the minds of these advisors is that the development of the hundreds of millions of African people takes first priority; or that linking Africa up with the world economy should go hand in hand with the development of the entirety of African people. There is linking and linking. Under imperialism and colonialism, Africa was linked to the world economy, but that linkage produced the underdevelopment and malnutrition of African people. Linking with the masses of our people, and linking with the “world economy” must go hand-in-hand; but what comes first is linking up with our own people, which shall give more strength to the domestic economy for linking up with the world economy.
Lenin and Trotsky formulated this issue very clearly in the 1921-1922 period of the Russian Revolution, when they were seeking solution to the problem of the underdevelopment of Russia. Listen to Lenin: “…the problem of the New Economic Policy, the fundamental, decisive and overriding problem, is to establish a link between the new economy that we have begun to create…and the peasant economy, by which millions and millions of peasants obtain their livelihood. This link has been lacking, and we must create it before anything else. Everything else must be subordinated to this.” (Lenin, Collected Works, Vol. 33, Moscow, Progress Publishers, 1966, pp. 269-270)
This insight led to the formulation of a new principle in class relations necessary for moving the Russian Revolution forward. This was the principle of what was called the “smychka” the “bond” between the proletariat and the peasantry. Again, Lenin: “Link up with the peasant masses, with the rank-and-file working peasants, and begin to move forward immeasurably, infinitely more slowly than we expected, bit in such a way that the entire mass will actually move forward with us. If we do that, we shall in time progress much more quickly than we even dream of today.” (Ibid., pp. 271-272)
Lenin warned that if the “bond” between the proletariat and the peasantry cannot be maintained, the Russian Revolution would face disaster and collapse. After Lenin’s death, and the removal of Trotsky from power, Stalin severed the “bond”, through forced collectivization; upon that policy emerged the Stalinist State, and the crisis of Soviet agriculture: this, actually, was the foundation of the process which led to the collapse of the Soviet Regime.
The “bond” between urban Africa and rural Africa, between the urban economy and the African village economy, between the African State and African rural communities and traditions of rural Africans –that bond is a dire necessity for the healthy development of Africa –and for South Africa. If we continue to fail to establish and sustain that bond between urban Africa and rural Africa, I see greater disasters and collapse for large areas of Africa, including disasters for our own country.
The underdevelopment and poverty of African rural communities are migrating to African cities and towns, resulting in increased poverty, diseases, social pathology, and underdevelopment in our cities and towns.
The result has been largely a breakdown and deterioration of urban infrastructure and facilities, a lowering of the quality of life in urban and rural areas, and increasing rates of social pathologies and mental imbalance. The latest issues of the Quality of Life Survey, published by the Durban Metropolitan Council (Urban Strategy Website), argue that the quality of life for the masses of people in the Durban Metro has actually deteriorated, in spite of increases in investments in infrastructure which have been put in place by the Metropolitan Council.
This has enormous consequences, not only for social life, but also for cultural life and politics, as well as for the economics of government. The deep underdevelopment of African rural communities, in which the majority of the national population resides, generating an economic crisis in the entire nation, produces rising levels of unemployment in urban and rural areas; and rising numbers of displaced and ill-housed people in towns and cities; it also produces rising levels of crime, social and sexual pathologies –what the French scholar called “anomie”. This results in the lowering of the quality of life in both urban and rural areas; and in the flight of middle and upper-classes from inner-city areas and townships to the formerly all-white residential and business areas: the crucial consequence of all this on government is the `financial crisis of the State’, which manifests itself in diminished funding for social and welfare services for the masses of society members. Life becomes expensive, especially the basic needs of life like food, clothing, housing, education, health care, and money. A creeping sense of crisis begins to infect ordinary people, as well as a de-motivation for engaging in ordinary social tasks and for high ideals; and a loss of morale overtakes society: all this manifests itself in a much diminished work ethic, and in all sorts of corruption.
The crisis of local government, manifested above all by the failure to deliver necessary services to masses of people in our society, particularly in rural areas and small towns, is a direct result of our failure to develop rural areas. It is rooted largely in the collapse of the rural village economy. It is a product of underdevelopment.
The increasing and disturbing instances in our society of social pathology, violence against women and children, unemployment, hunger and poverty, including the so-called growing gap between the `black elite’ and the `black’ masses, is the bill presented to our nation for the wrong advice of economists to our leaders, and for our failure to eliminate underdevelopment and poverty in the African countryside; it is the bill presented to our nation and continent for our failure to bring about a “bond” between urban Africa and rural Africa.
I shall paraphrase W.E.B. Du Bois: the problem of the 21st century in Africa is the problem of the relationship between the African city, on one hand, and the African countryside, on the other hand; another way of expressing it is to say that the problem of the 21st century in Africa is the problem of the relationship between African governments, on one hand, and the African countryside, on the other hand.