By Zukiswa Mqolomba
Firstly, the ANC Youth league must be applauded for raising debate on key and critical questions about the need to unlock natural productive forces in pursuit of national development.
The league has tried to put both a strong historical account and case for nationalisation on the one hand, and an ideological basis for it on the other, using various models and options of state ownership precisely because they want to answer this key question: How do we utilise mineral wealth beneath the soil for human development?
The “national question” cannot and should not be tossed aside by corporate South Africa as hitherto mediocrities of a rambling mad man.
Indeed there is a compelling case for nationalisation.
Firstly, the ANC does have a responsibility and revolutionary task to changing the fundamental structure of our productive economy. The ANC NWC document, para 6.1, June 2006:
“Access to state power should be utilised to deracialise patterns of ownership and control of wealth; reconfigure the distribution of national resources in favour of the poor and utilise the government budget, the economic power of state-owned enterprises and capital in the hands of working people to change the structure of the economy.”
Secondly, strategic control of mining is particularly important in efforts to counter price-fixing of beneficiated products on our local market. Sasol, for example, is notorious for undermining local downstream producers (and therefore job creation) with its price-distorting monopoly behaviour. Steel producers are also currently under investigation for price collusion.
Thirdly, nationalisation would signify an important move away from BEE towards Broad Based Black Economic Empowerment (BBBEE). Is it not the case that BBBEE is intended to resocialise the economy and to distribute wealth across as broad a spectrum of South African society as possible?
However, I think the ANCYL has failed to grapple with the tactical considerations and objective realities of realising a progressive agenda of this nature. The challenge of nationalisation has never been about strategic intent, but tactical considerations and tactical strategies. Having acknowledged Dialego’s caution, the ANCYL must also heed to the organic approach to policy propositioning. Umrabulo No 7 (1999):
“Our priorities and programme … should be informed by a common understanding of the balance of forces. As we said in our Strategy and Tactics (1997) the balance of forces are ‘critical to defining the tactics the liberation movement should adopt at each stage of transformation’. This should also inform the specific decisions we take eg on issues such as prescribed assets or changes in policies. This is also important when we consider the question whether — at a given time — when we implement policies of the ANC or a joint programme of the alliance, we do so because of constraints imposed by the balance of forces or whether our approach is determined by revolutionary logic.”
We must remember that our Marxist tools of analysis compel us to move beyond mere abstractions and philosophies in explaining what is, and instead to be tacticians and strategists in our attempts to change the world.
And truth be told, there is also a compelling case unfavourable to nationalisation.
In making subjective determinations on the basis objective analysis, we should bear in mind the unintended consequences of a just cause, the complex realities of the current global and national recession, the questions around mining viability, rising capital expenditure, cost implications, productive efficiency requirements, as well as structural impediments.
Firstly, experts have argued that nationalisation might have the unintended consequence of simply bailing out indebted private capital, especially BEE mining interests. According to government reports, government estimated that some 80% of BEE deals were under the threat of being liquidated and indebted, as a result of the global recession. BEE mining shares were particularly hard hit as a result of the sharp fall in commodity prices on the global market. And while there has been something of a recovery for some commodities, the robustness of the recovery of these mines still remain very uncertain.
Secondly, it is opportune to ask whether it would be viable for the state to take over the mining sector, in the context of increasing depletion of mines dealing with non-renewable natural resources and electricity price hikes. Though global gold prices have begun to recover from the bullets of the recession, our gold output has dropped by app 9% within the same period. The increases in Eskom electricity hikes of up to 45% also dampen the economic prospects of the sector. Electricity is estimated to be between 10% and 15% of mining operation costs.
Thirdly, the exercise of nationalisation is bound to be a costly one. In this instance, it is important to note that though the Property Clause in the Bill of Rights actually sanctions expropriation “for a public purpose or in the public interest”, the Bill of Rights still requires the payment of compensation for expropriation, at a price either agreed to by both parties or determined by a court. This will always be the case unless constitutional changes are made to the contrary. An investigation into actual figures (ie looking at the market valuation of South African gold shares to get an idea of the expropriation compensation that might be required, rough estimate of the cost of servicing the debt involved, a look at what the companies have paid in dividends) gives a good indication of how much this is likely to cost.
Unfortunately, it is highly likely that the state will find itself in a situation of wasting billions of rands in compensation at a time when we have other pressing priorities that actually have a better chance of success to contributing to a fundamental transformation of our current accumulation trajectory, as problematic as it might be perceived.
Nationalisation does not necessarily provide the best stimuli for development, because there are no incentives for good performance due to the lack of competition.
Most importantly, nationalisation cannot and does not address the systematic structural realities that lock South Africa into a semi-colonial status in the world economy. Unfortunately, nationalisation cannot resolve that much of the activities at the higher levels of the production value chain happens off South African shores (ie processing and beneficiation). In the case of aluminium smelter plants, for instance, they are huge electricity gobblers, and the bauxite used for the production of aluminium is not even mined here, but shipped over from Australia.
The league must therefore provide leadership on the strategic and tactical questions around nationalisation. And contend with glaring realities. In my judgment, the cause of nationalisation is a just and ideal cause. However, the case for nationalising the mines is yet to be made convincingly by the ANCYL.
Karl Marx, in 1837:
“If we have chosen the position in life in which we can most of all work for mankind, no burdens can bow us down, because they are sacrifices for the benefit of all; then we shall experience no petty, limited, selfish joy, but our happiness will belong to millions, our deeds will live on quietly but perpetually at work, and over our ashes will be shed the hot tears of noble people.”
Zukiswa Mqolomba is completing her master’s degree in social sciences at the University of Cape Town. This article reflects her personal opinions.
It will be interesting to see responses to this one.
You probably know you have just staggered into a hornets nest . good luck- but somebody has to address redistribution of wealth
The arguments for nationalisation are lofty ideals that have no practical way of being realised. I suggest a referendum on this matter for SA taxpayers. Given that they will have to ultimately bail out any failures by increased taxes, where is the incentive for them?
South Africans are too useless to be socialists, thank God for the capitalists.
I can see the benefits of socialism and nationalisation, but with Eskom failing, faltering/failing service delivery, municipality bankruptsies, 90% of redistributed white farms in SA failing, I can only thank God for the capitalists, their businesses and farms still work.
One has to have a socialist ethic, an ethic of giving not grabbing if you want nationalisation to succeed. Socialist parties are workers parties, not ‘slapgat’ corrupt bums parties. Too many South Africans are allergic to real work.
The mentality of South Africans means we deserve crony capitalism, and semi-dictatorship, because that is how the average person who gets any authority in this country behaves.
We are not prepared to go the extra mile socialism requires. We South Africans are takers not givers, and we want everything for nothing, we are after all ENTITLED to it.
Nationalise the mineing sector and lazy fat cats will get their bonusses for doing nothing, and the mines will go down the same unhappy inefficient path as Eskom, bankrupt municipalities and redistributed white farms.
Hey Zukiswa.. Lovely writing! So full of idealism. I remember my student days all too well…one for all and all for one – how we were going to change the world, but tell me, I dont see anything in your piece about human nature ( Greed, Power..), isn’t there just a little space for that in your world view. Well done anyway, that must be worth at least a B+.
A very thorough analysis of what has become a rather polarised and emotional topic of discussion! Much enjoyed!
I got to the part where you quote the ANC NWC document, para 6.1, June 2006 “…in favour of the poor…”, and stopped reading. The ANC only pays lipservice to the millions of poor in order enrich the few connected.
It is very good of you to help Julius by trying to put some respectability to his rantings. I am sure you have moved up a page in his little black book.
An excellent blog.
Beerboep did himself a disservice by not reading your astute analysis.
Oh well.
I love reading your articles Zuki but this is so long
The greatest problem is the cost of remediation of old and abandoned mines. I estimate this at a round 10 billion Rand. If we nationalise, then the state (you and I) bear the costs. However, if we insist that the mining companies participate in the remediation of past workings and enforce their remediating current ones, then this comes out of the profits, with some state input.
Currently, new mining projects are depriving once thriving rural communities of their livelihoods, leaving them without access to their lands for food and access to clean water.
Much more thought is required here, and we truly need to apply our minds to where we as a nation wish to go. Food and water security are massively more important than mining, which delivers very few jobs, compared to food production and looking after our water infrastructure.
Mining has given us acidic rivers, groundwater and streams, rendering whole areas untillable. Can we afford to lose more?
the perspective of nationalisation of mines and the wealth of this country can only be in the centre of debate only after we have started by identifying ourselves as South Africans as to who are we ?, What do we have own in as far the ownership is concern ? because most of our mines are owned and control by the Western Countries therefore it will be more difficulty to the South Africans and the Governement to even start to think to start debate this issue on a very serious note.
therefore the Youth League must not take this subject as a just a petty issue, this is a very creatical and most important subject. As Pan Africanist Congrees of Azania , Nationalisation is one of the most important policies that justified the importance of the Land issue. No matter what, any one before he /she address the Nationalisation properly he have to link it with the ideas that are going to be the alternate to the currently economic policy of this country ie the Privatasion. As Pan Africanist Congress of Aziania member i wiil there suggest that the Youth League must firstly address the changes within the Economic Policy from Privatazition to Nationalization, the dream of job creation would be the reality.
thank you.
MALINGE KA PLAATJIE
This is a very interesting, well reasoned article. Zukiswa, you are great! I really look forward to hearing more from you.
Real Old Fossil said it all – spot on!
SA is rapidly slipping further and further backward in mining — from being the world’s number 1 gold producer a decade ago to only number 4 now — producing only as much as what SA did at the start of World War One! And ditto diamonds, and likewise many other minerals.
Mining profits have plunged. The miners are now a favoured and closed-shop elite of uneducated people paid generous wages far above their skills and qualifications. The same-old, same-old mine bosses are paid obscene sums as if they really are all in massive world-wide demand for their expertise, like an individual like Kloppers of BHP-Billiton. And mining is tanking.
So, if mines are nationalised and all miners are added to the nosepicker civil servants’ payroll, do you REALLY think these struggling mines will ever earn their commercial keep? Or will the taxpayers just be paying the price of “workers” who are only pretending to work, and state “bosses” who only pretending to pay them? Exactly like in all those old Iron Curtain nations before that whole project collapsed in utter failure.
The point is surely that without property rights and private ownership there can be no incentive to create wealth. I would dispute the claim that Nationalisation is a just cause, of course it’s not! It’s theft. The state (read ANC) act like a bunch of gangsters, it is not their right to take anything that belongs to anyone else, whether or not they use other peoples’s money (taxes) to pay compensation. We are going back to feudal times where the robber barons own everything and buy protection against the subservient masses. If I had to choose the less destructive between opposing factions within the ANC…that is the thugs and gangsters or the thugs and socialists I would think the country and its people have a better chance of survival under the gangsters.
Can you imagine working for a company that has a little more than 500 employees and has the following statistics:
29 have been accused of spousal abuse
7 have been arrested for fraud
19 have been accused of writing bad cheques
117 have directly or indirectly bankrupted at least 2 businesses
3 have done time for assault
71 cannot get a credit card due to bad credit
14 have been arrested on drug-related charges
8 have been arrested for shoplifting
21 are currently defendants in lawsuits
84 have been arrested for drunk driving in the last year
373 in total or approximately 70%
Can you guess which organization this is?
It’s the 535 members of the SOUTH AFRICAN PARLIAMENT -
Nationalise the mines and put these people in change, I think not.
Great Article. Thanks for reminding us to think – think before we start shouting and ranting and raving – hiding the fact that we are just really helping ourselves to the loot. I think that Witbooi raises important points which are all too often not included in our thinking about what to do next. Forward Ever!
Your reasons for not to nationalize are weak:
“experts have argued that nationalisation might have the unintended consequence of simply bailing out indebted private capital, especially BEE mining interests.”
Experts!!! Hogwash! Even if this were REMOTELY true, BEE interests could simply be unwound. Nationalization is not a friendly buyback program or even like a hostile takeover, the government calls ALL the shots. The government dictates all the rules of how nationalization takes place. Did you know that the French government SEIZED the car company Renault, because the owners collaborated with the Nazis during their occupation of France in WW2?
Your second argument against nationalization is weak since the rise in gold prices have continued for decades and show no signs of abating in the long term since world currencies are shaky in the face of a tightening world wide recession.
“Thirdly, the exercise of nationalisation is bound to be a costly one. ”
Again this argument falls flat since its the government that dictates the terms, there is very little negotiation!
The valuable finite mineral wealth of our country is being plundered mainly by multi-nationals that control the media and fund many of the “expert” opinions that you succumb to. Time for South Africans to take control of our resources once again!
The fact is, the state has too much on its plate already.
When people argue that nationalisation of mines is a bad idea, the argument must be seen in the context of how many state-owned entities are already failing; not that we slate the concept of nationalisation, per se.
Even Telkom, once state-owned, has the wrong mindset for success.
Let government get its present responsibilities into profit and performing and THEN look further afield. At the moment, it seems that the more it takes on, the more crumbles around us.
And that’s the priority concern.
State-owned entities, departments and municipalities work according to ‘safe job haven’ thinking. There is no pressure to make a profit, supply the services expected or think as those in the private sector have to, to succeed.
And that, for me, is where the problem lies.
Take Eskom: which was doing a lousy job despites its much-valued white chairman; race is not the issue. The mindset of management is.
We all have known for ages that the reason Eskom can’t get funding is because it won’t go green. Why has the entity only just got the point? Barbara Hogan has only just got ‘it’. We (the public) did ages ago, even tho’ few of us are entrepreneurs or business owners. Dozens of African countries are recieving funding for power.
Did Eskom never ask: ‘Why not us?’
All very noble, but hardly realistic. One quick look at how successful the government has been at running Eskom, SABC, Land Bank, Denel, SAA, Transnet, municipalities, education, roads, water supply, etc etc and the idea of nationalising the mines is clearly daft.
The taxpayer cannot afford to have to carry yet another noose around its neck.
Let the ANC and government show that they can actually effectively run something (anything) and we can re-look at this issue.
Nationalising everything is one thing but with our incompentent goverenment, who will manager all this stuff.What most peoeple are afraid of is that our greed fat politicians will stuff there pockets and dissapear.
This is like redistributing the deck chairs on the Titanic. What the poor need is education and more education so that they can add skilled value to the stuff that comes out of the ground. The higher up the chain of production one can go, the greater the income and more employment there is to go around. Ask the farmer what he gets for his sweat and the difference you pay for his product. Then even a fool can see where value lies.
do you honestly think that the youth league can think this strategically? your idealism is refreshing, but it is entirely unrealistic in the context of south africa and with regard to the youth league leading the cause of nationalisation.
i don’t think the league really understands the issue, to be honest. and i suspect that nationalising key assets will only harm south africa in the end. it is an open, competitive economy that has allowed post-1994 south africa the economic success it has enjoyed. closing key sectors in order to distribute wealth is a nice idea. but in the hands of an anc government, you really have to be out of touch with reality if you think this would have tangible benefits for the poor.
Thank you sis for the wonderful piece, two interesting things. You did not indicate by when should this take place.And yet all the responses are talking about the current government and the ruling party. If we so sure that the ANC will rule until the son of man comes, surely we must prepare ourselves for the ultimate implementation of nationalisation.
Hopefully i will get some robust feedback to my simple economics on the benefits of private investment vs Nationalisation without comments on my colour, race, gender, age or where my grand parents comes from.
Private capital (internal or via overseas) comes without adversly affecting our money supply, in fact adds to our wealth.
1st – the investor pays for a permit = money to Govt/people
2nd – investor spends money in SA building plant = jobs etc
3rd – once up and running creates jobs + buys locally = happy people
4th – once product/ore is created and a profit made pays tax = money to Govt/The People
If Govt has any sense permit comes with ruling that ore/minerals must have an added value in SA before exporting = more investment + more jobs + more tax money = happy Govt = happy people.
Check out all the benefits to SA/Govt/The People at no cost to Govt. Clever Govts. set tax/profits so that SA/Govt/people get equal benefit as the investor all for FREE.
Nationalisation = Govt paying for investment, where does money come from? US the people, where does profit go? To them the Govt/ruling classes definitely not the worker or The People.
Only real benefit of Nationalisation/Govt owned is that the ruling classes get more power and workers/people get less as they will never stand up to such a huge owner when the crunch comes.
Ask your union friends who they would like to negotiate with, say SASOL or the Govt?
Brent
Nationalisation can work – Economist Joseph Stiglitz, “Although the most efficient steel mills in the world are those established and run by the Korean and Taiwanese governments, they are an exception.
http://blogs.myspace.com/index.cfm?fuseaction=blog.view&friendId=289596662&blogId=488103149
The Koreans and Taiwanese have a very different work ethic compared to South Africans, which is why nationalisation can never work here.
South Africans are only too willing to grab the spoils and enjoy leisure time 24/7 without putting any effort in.
Bravo!!
But why be so timid?
Why only the mines?
Let us go for the banks and the commanding heights of capitalism and take the whole damn lot in one foul swoop!
Why do this piecemeal when a revolution demands the violent overthrow of this vile capitalistic structure.
Let street commitees rule and invade, let the masses rule, let us finally have the democratic rule by the lumpen proletariat; from those according to ….and so on and so forth.
Wakey wakey!
This be the 21st century and NOT the 19th.
Get with the program and come up with something that actually WORKS instead of regurgitating tired old slogans that have never worked, do not work and will not work.
The vanguard of the struggle better pull up its socks and start thinking for a change instead of parroting slogans and bromides whilst grunting at the trough.
Bring us something new and I’ll join you but for pity’s sake, leave old Marx to rot in his grave, he be very old news
Don’t pay the mines for nationalisation. Just take them over. The mines have received special treatment on taxes, land grants, labour exploitation for about a hundred years. If you add all that up it pays for nationalisation ten times over. And, of course, the environnmental damage is enormous. Jo’burg and its environs is in deadly danger, for example.
Use the nationalisation argument as a tactic to get the mines to pay higher taxes across all their holdings in Africa, and to put right the environmental damage. Then negotiate, not what, but how.
They need a wake-up call.
However, I agree that there are serious concerns about the motivation and competence of government employees to run anything economically.
If we are to nationalise, we must move progressively to that goal. There are a lot of things that have been nationalised and that are doing well. The public health system, the law enforcement agencies, Eskom, Transnet etc. I think that the debate must start with saying how dowe ensure that these are efficiently run to give confidence to the nation that the state should be allowed to take on more responsibility and also address the concern that is raised by Witbooi: human frailities.
In my view, it is not about the experts or what the global communinity would like to see. My difficulty is that as a black South African, I do not have confidence that the state that has so many challenges that it is battling to deal with, should be given more responsibility of such complex a process as mining is.
Typo
“There are a lot of things that have been nationalised that are not doing well”
Jolly good explanation, Brent! Anyone who reads it can understand it.
Only problem is, the majority takes pride in its A-literacy. In the words of my bank’s consultant: ‘You want me to read the whole page?’
Ag shame! You are preaching to the converted, as do we all. As Mum used to say:’There are none so deaf as do not wish to hear.’
51% majority stake in the local mines by gevernment is not nationalisation. It is exactly what Botswana is currently doing with its mines and to this I have never heard of investors leaving their country. I have never heard any economist labelling what they are doing socialism or nationalisation.
This has to happen and it is going to happen whether under Zuma or not. Those profits would be better used to develop the mining areas and the country at large. The sutmbling block of course is tenedency by officials to enrich themselves.
This will be the reversing of what Mbeki did with the parastatals which as we all know has been disastrous as Cosatu warned. SAA and ESKOM are classical examples.
Parastatals were good government employment hubs and their privatisation has led to massive retrenchments which account for the large component of our current unemplyment figures.
Obama had no choice but to go this route to arrest the erosion of the US economy and save the rest of his nation.
@Lebohang
’51% of mines in Botswana are state owned’. Maybe, but the Botswanans are honest hard working people.
No one dare steal one cent from under President Ian Khama’s nose, and he lives a very frugal military-style life himself. He is 56 years old, un-married and has no kids. A tad different from our president.
The only high flying President Khama does is in aircraft. He is a qualified pilot and attended Royal Military Academy Sandhurst, where the British Army trains its officers.
best wishes
Borrie
NATIONALIZATION OF STATE RESOURCES ERA 2009-
I must unequivocally raise my own observation on this unpopular debate, amongst the arrogant and ignorant staunch neo-liberals of South Africa.
These political organizations AZAPO, PAC, and SACP after ANC, had called and directed their struggle towards nationalizing the state resources, in order to effect equal and fair distribution of resources amongst the citizens of the country.
I note and put ANC as the first organization to raise this call for because it is the first political organization to gain ground and support here in South Africa, as it was established since 1912 and in reality it was the first party at least to that seriously organized to carrying the aspirations and hope of the oppressed Black people of South Africa in that particular era. As one could notice above that I started with rookie of the struggle to the mother of all as last mention.
The freedom charter shows it clear that too and indeed the ANC really did aspire and commit itself in the struggle for nationalization of the state resources as notion that:-
“The national wealth of our country, the heritage of South Africans, shall be restored to the people;
The mineral wealth beneath the soil, the Banks and monopoly industry shall be transferred to the ownership of the people as a whole;
All other industry and trade shall be controlled to assist the wellbeing of the people ;( http://www.anc.org.za online)
This nationalization was pushed by the notion