Committee for the Abolition of Illegitimate Debt

Often distracted by the foibles of President Jacob Zuma, the society rarely digs deeper into debates over economic policy management, but that changed last month during a revealing leadership crisis.

Badly shaken, corporations operating in South Africa, whether local or global, are now at their most unpredictable and unpatriotic, as the economy suffers more rapid expatriation of dwindling profits, dangerous vulnerabilities to financial crashes and foreign debt crisis, the near death of several mega-mining firms that once ruled the roost, and a schizophrenic ruling class giddy some days about their good fortune to have survived the anti-apartheid movement’s near revolution thanks to co-optation of a critical mass of African nationalists, but inconsolably depressed most others.

Optimistically, if The Guardian’s Larry Elliot is correct that “The biggest immediate risk to the global economy comes from the emerging world, especially those parts of it affected by the crash in the cost of commodities Commodities The goods exchanged on the commodities market, traditionally raw materials such as metals and fuels, and cereals. ,” then this society could offer a positive formula for turning capitalist vinegar into red wine.

But counterproductive populist tendencies in the state may also prevail, as the ruling African National Congress (ANC) becomes both more desperate, tyrannical and simultaneously patronage-oriented during this (municipal) election year. Previewing the campaign, Zuma’s surreal anti-capitalist rhetoric the last few weeks became feverishly hot in speeches to both his allied trade unions and to black business elites. But the talk-left walk-right balancing by the wily politico will be a harder song-anddance routine this year than ever before.

In this essay, which is dedicated to capital’s contradictions (with a follow up aimed at the state and civil society), we begin by considering the near train smash which in December 2015 set the Pretoria Cabinet against Johannesburg Capital. The latter’s Pyrrhic victory put a brake on what many feared was an over-the-cliff economic journey, but does nothing to change the underlying conditions.

Indeed the neoliberal, deregulatory thrust and growing vulnerability to world capitalist crisis that has characterised South African economic mismanagement since the early 1990s probably became more pronounced, while the spending profligacy that Zuma desires for his closest mates was only momentarily diverted. In many ways it is the worst of all worlds, as both the political and business elites secure last-gasp privileges before things get really rough in 2016.

Rising economic chaos and political panic

Without question, the financial roller-coaster ride that nearly all the emerging markets barely survived last year will become more exciting as South African securities receive formal ‘junk’-status ratings later in 2016. The challenge for disparate forces on the political left is to derail the faultiest, most dangerous cars on the capitalist train.

For a change, these also appear to be the ones most ready to tip over in any case, carrying corporate chief executives most oriented to corruption, to labor exploitation and to reaping profits from dubious investments elsewhere in Africa. Those cars are also bearing the load of boorish politicians like Zuma, whose punch-drunk behaviour in the last month suggests he might well flip South Africa off the track all by himself.

Zuma’s musical-chairs cabinet reshuffling began on December 9 with the firing of a finance minister, Nhlanhla Nene, who was becoming more brutal to (black) poor and working people – insofar as his 2015-16 budget reduced their welfare grants and restructured retirement funds against their wishes – and exceedingly generous to the (white) rich. (Ironically, Nene was a former militant in the South African Commercial, Catering and Allied Workers Union.)

Those who profited from apartheid and its neoliberal aftermath can, following Nene’s last exchange control relaxation, take offshore $700,000 annually (a 2.5 times increase from the prior year). Explains a Moneyweb reporter, this “effectively ended controls for all but the most wealthy South Africans.”

The voice of white capital most frequently demanding a ‘Big Bang’ elimination of exchange controls, Business Day publisher Peter Bruce, last month mourned Nene’s departure and put his eggs in SA Reserve Bank Governor Lesetja Kganyago’s basket. At a private breakfast meeting, Bruce regaled, Kganyago “made no bones about being ready to defend the Bank from political interference. He and the officials with him made two policy points on which they said they were all agreed. First, capital controls would not be tightened — if anything, the opposite — and they would continue to target inflation Inflation The cumulated rise of prices as a whole (e.g. a rise in the price of petroleum, eventually leading to a rise in salaries, then to the rise of other prices, etc.). Inflation implies a fall in the value of money since, as time goes by, larger sums are required to purchase particular items. This is the reason why corporate-driven policies seek to keep inflation down. , it being the curse of poor economic management.”

(Substantial exchange controls continue for institutional investors Institutional investors Entities which pool large sums of money and invest those sums in securities, real property and other investment assets. They are principally banks, insurance companies, pension funds and by extension all organizations that invest collectively in transferable securities. , pension funds Pension Fund
Pension Funds Pension funds: investment funds that manage capitalized retirement schemes, they are funded by the employees of one or several companies paying-into the scheme which, often, is also partially funded by the employers. The objective is to pay the pensions of the employees that take part in the scheme. They manage very big amounts of money that are usually invested on the stock markets or financial markets. and insurers; these restrictions keep the stock market at its most bubbly level in history.)

With the neoliberals’ looseness of foreign exchange management necessarily comes the suffocating tightness of monetary policy: higher interest rates Interest rates When A lends money to B, B repays the amount lent by A (the capital) as well as a supplementary sum known as interest, so that A has an interest in agreeing to this financial operation. The interest is determined by the interest rate, which may be high or low. To take a very simple example: if A borrows 100 million dollars for 10 years at a fixed interest rate of 5%, the first year he will repay a tenth of the capital initially borrowed (10 million dollars) plus 5% of the capital owed, i.e. 5 million dollars, that is a total of 15 million dollars. In the second year, he will again repay 10% of the capital borrowed, but the 5% now only applies to the remaining 90 million dollars still due, i.e. 4.5 million dollars, or a total of 14.5 million dollars. And so on, until the tenth year when he will repay the last 10 million dollars, plus 5% of that remaining 10 million dollars, i.e. 0.5 million dollars, giving a total of 10.5 million dollars. Over 10 years, the total amount repaid will come to 127.5 million dollars. The repayment of the capital is not usually made in equal instalments. In the initial years, the repayment concerns mainly the interest, and the proportion of capital repaid increases over the years. In this case, if repayments are stopped, the capital still due is higher…

The nominal interest rate is the rate at which the loan is contracted. The real interest rate is the nominal rate reduced by the rate of inflation. not just to lower inflationary pressure (that ‘curse’ which bankers hate most) and to attract hot-money capital to South Africa. For the Reserve Bank needs more foreign exchange to pay nearly unprecedented levels of profits and dividends to the unpatriotic bourgeoisie who continue to flee. Kganyago keeps the 10-year government bond Bond A bond is a stake in a debt issued by a company or governmental body. The holder of the bond, the creditor, is entitled to interest and reimbursement of the principal. If the company is listed, the holder can also sell the bond on a stock-exchange. interest Interest An amount paid in remuneration of an investment or received by a lender. Interest is calculated on the amount of the capital invested or borrowed, the duration of the operation and the rate that has been set. rate at the fourth highest level (9%) amongst the world’s 57 largest economies, only below Brazil, Turkey and Venezuela.

As ‘sado-monetarism’ intensified since early 2014 – with four Reserve Bank rate increases (though the US Federal Reserve FED
Federal Reserve Officially, Federal Reserve System, is the United States’ central bank created in 1913 by the ’Federal Reserve Act’, also called the ’Owen-Glass Act’, after a series of banking crises, particularly the ’Bank Panic’ of 1907.

FED – decentralized central bank : http://www.federalreserve.gov/ only finally raised its rate in December 2015) – fixed investment plummeted, brought down by private sector capital strike.

Source: SA Reserve Bank Quarterly Bulletin

Hand in hand with Kganyago (Treasury’s former lead official), Nene was steadily pushing the society into a deep, potentially revolutionary anger, just as a summer drought became crippling, leading to soaring food prices. Nene was fracturing the ruling ANC alliance with workers and communists, by allowing rampant wealth drainage in spite of the country’s desperate need for reinvestment in productive activity.

But that didn’t matter to Zuma, who according to insiders, was most opposed to Nene because he threatened to deny Treasury funding to presidential friends in the airline and nuclear reactor industries (the latter, especially, from Moscow). As an obvious fig leaf, on December 11, Zuma publicly earmarked Nene to head up the future Johannesburg branch of the BRICS New Development Bank (NDB).

Former Finance Minister Trevor Manuel (now at Rothschilds Bank) scorned that move as an 85% job responsibility cut for Nene, revealing local elite contempt for the institution which so many commentators over-optimistically hoped would offer a genuine alternative to orthodox finance. (One of the two BRICS Bank directors chosen from South Africa, the erratic former central bank Central Bank The establishment which in a given State is in charge of issuing bank notes and controlling the volume of currency and credit. In France, it is the Banque de France which assumes this role under the auspices of the European Central Bank (see ECB) while in the UK it is the Bank of England.

ECB : http://www.bankofengland.co.uk/Pages/home.aspx governor Tito Mboweni, had earlier derided the $100 billion NDB as “very costly” and yet just after his appointment, he told Bloomberg that nuclear financing “falls squarely within the mandate of the NDB.”)

Thanks to Nene’s unabashedly neoliberal record, three leading bankers –Barclays Africa’s Maria Ramos, Investec’s Stephen Koseff and Goldman Sachs’s Colin Coleman – were, The Times reported, “in constant consultation with the ANC [and] forced the ANC to demand that Zuma reverse his decision.” And behind Barclays, Investec (the fifth largest local bank) and Goldman Sachs, lurked three even more threatening institutions: Moody’s, Standard&Poor’s and Fitch, all holding the power to downgrade South Africa’s credit rating to junk bond status in coming weeks.

In the immediate 48-hour aftermath of Nene’s firing, an estimated $28 billion worth of local financial assets evaporated, as investors fled. Financial institutions took the main hit, with First National Bank losing 10% of its stock market value. But the entire society became visibly nervous, with the highest-profile labor personality, Zwelinzima Vavi, declaring, “We are on a roller-coaster without a driver, and we are about to come off the rails!”

On December 13, after four days of banker armtwisting, Zuma surrendered. He shifted van Rooyen sideways and rehired as finance minister Pravin Gordhan, a man just as beloved by the financial markets as Nene and Manuel. Although originally a Marxist community organizer trained in pharmacy, Gordhan U-turned ideologically and served first as national tax commissioner and then finance minister from 2009-14, a period in which a brief Keynesian deficit was followed by increasingly neoliberal budgeting and financial deregulation.

Into Gordhan’s former post as minister of local government, Zuma placed van Rooyen, in spite of his embarrassing prior municipal management experience. When serving as mayor of the small city of Khutsong a decade prior, his house was torched during one of many community protests against his failure to support activists’ service delivery demands against the national state. In mid-2016 this move may backfire during countrywide municipal elections.

Reacting to the top-down turmoil, the repoliticization of society bottom-up proceeded quite unevenly. In spite of widespread fears about economic ruination and a coming spike in corruption, a #ZumaMustFall campaign in most of the main cities on December 16 gathered only a few thousand protesters, who were mostly urban and middle-class, with a far higher number of privileged whites than proportionate to the society.

Though #ZumaMustFall had some progressive organizers, its class/race character worried leaders of the largest trade union, the National Union of Metalworkers of SA. Its leader Irvin Jim called the protest “a march organised by, for, and together with, all the wrong right-wing liberals and for a right-wing cause: the appointment of a finance minister capable of protecting the financial and property interests of our class enemies.”

Foreign vulnerabilities and the unpatriotic bourgeoisie

In subsequent days, just before the holiday break, Gordhan opposed Zuma’s closest airline ally, SA Airlines chairperson Dudu Myeni, on the prohibitively expensive deal and middle-man arrangement she had proposed to buy and lease Airbus planes (simultaneously, Zuma’s spokesperson publicly denied he was having an affair or had a child with Myeni). But Gordhan agreed in principle to fund several nuclear reactors.

However, the fiscal conditions he’ll face in 2016 and subsequent years are going to be exceptionally tough in part because of the desperation that businesses are now facing, and in part because his prior permission to let profits flow abroad put South Africa’s foreign debt close to $150 billion, double the amount he initially inherited from Manuel in 2009. But unlike then, Gordhan cannot expect an elite consensus in the world economy to permit greater fiscal expansion, unless a crisis of that magnitude arises.

Worse, according to a December 2015 Global Financial Integrity report, from 2004-13 alone, the supposedly fiscally-responsible Manuel, Gordhan and Nene permitted an average of nearly $21 billion in annual illicit financial outflows by multinational corporations (6% of current GDP GDP
Gross Domestic Product Gross Domestic Product is an aggregate measure of total production within a given territory equal to the sum of the gross values added. The measure is notoriously incomplete; for example it does not take into account any activity that does not enter into a commercial exchange. The GDP takes into account both the production of goods and the production of services. Economic growth is defined as the variation of the GDP from one period to another. ), peaking at nearly $30 billion in 2009. Economists Seeraj Mohammed, Samantha Ashman and Susan Newman estimated that in 2007, capital flight reached 23% of GDP.

Many of the worst offenders were apartheid’s corporate architects – Anglo America, De Beers, Old Mutual, SAB Miller, Investec, BHP Billiton, Liberty Life – which from the mid - 1990s to early 2000s gained ANC permission to relist their shares from Johannesburg to London, New York and Melbourne.

Researchers Sarah Bracking and Khadija Sharife revealed that De Beers mispriced diamonds by $2.8 billion from 2004-12. Platinum was another high profile source of corporate crime. Averaging more than $25 million in illicit outflows annually, Lonmin utilized a bogus Bermuda marketing scheme, as the Alternative Information and Development Centre showed.

Overall, at Lonmin, AngloPlats and Impala (the three main platinum companies), shareholders and top managers appropriated a disproportionate share Share A unit of ownership interest in a corporation or financial asset, representing one part of the total capital stock. Its owner (a shareholder) is entitled to receive an equal distribution of any profits distributed (a dividend) and to attend shareholder meetings. of revenue, University of the Witwatersrand economists Andrew Bowman and Gilad Isaacs argue, with profit Profit The positive gain yielded from a company’s activity. Net profit is profit after tax. Distributable profit is the part of the net profit which can be distributed to the shareholders. margins ranging between 22% and 57% during the 2000-08 boom, far above the stock market top-40 corporate average profit rate of 18%. Workers received only 29% during that period, with dividends and profits comprising 50%, taxes and royalties to the state drawing out 11%, and financing costs taking 10%. (The ratios improved in the subsequent period as a result of intensified class struggle.)

In another case, Sharife recently proved how Coca-Cola diverts Southern African profits into ‘intangible capital’ payments to the Cayman Islands and Delaware. Moreover, in a moving journalistic series – “Casualties of Cola” – exemplifying South Africa’s rich political economy tradition, a team of Daily Maverick reporters last month investigated the way labor outsourcing here boosts Coca-Cola’s profitability. The addictive sugary water is distributed through the giant brewer SAB Miller’s driver self-ownership system.

Shocking details of what David Harvey terms ‘accumulation by dispossession’ emerge, reminding us, as Giovanni Arrighi and his colleagues have shown, that Southern Africa’s system of brutal super-exploitation was always, and remains, world-class.

Such corporate misconduct is familiar enough in South Africa, given the elites’ worldleading levels of fraud. “Just after the financial crises in 2008, outflows increased by nearly one quarter,” observed a Davis Tax Committee report on Base Erosion and Profit Shifting. “It seems peculiar that legal, accounting and management consulting services increased by 32.6% and engineering and technical services by 39.5%. Consumption increases during the aftermath of a global financial crisis seem odd in the wake of sluggish economic activity, uncertainty and falling commodity prices.”

But the Davis Committee was conservative about fighting illicit financial flows, what with its assumption that “The tax policy should not adversely affect South Africa as a suitable foreign investor destination” at a time all G7 and BRICS economies except the US had lowered their tax rates. Nothing substantial was done to halt the practice.

The Davis Committee concluded that “South Africa cannot afford to proceed too hastily with the OECD OECD
Organisation for Economic Co-operation and Development OECD: the Organisation for Economic Co-operation and Development, created in 1960. It includes the major industrialized countries and has 34 members as of January 2016.

http://www.oecd.org/about/membersandpartners/ Action Plan while other countries are taking a ‘wait and see’ approach, relaxing their laws to attract investment and changing their policies in order to remain competitive.”

Thanks to such defeatist attitudes in the state, even if corporates’ recorded profits are falling rapidly, illicit flows may be worsening. So while November 2015 witnessed a small ($110 million) trade surplus (with 2015 likely to show a cumulative $3 billion deficit), the outflow of capital in the form of profits, dividends and interest is much greater, at a third quarter 2015 rate of $800 million per month. As a result, a sovereign debt Sovereign debt Government debts or debts guaranteed by the government. crisis appears inevitable on the medium-term horizon.

Corporate contradictions

Nearly five years ago, discussing the North African (‘Arab Spring’) uprisings and predicting a ‘Tunisia Day’ for South Africa within a decade, Moeletsi Mbeki – a journalist-turned-entrepreneur (and younger brother of former President Thabo Mbeki) – explained the ANC’s sell-out to big business. The country’s richest white men, according to Mbeki, “took their marginal assets, and gave them to politically influential black people, with the purpose, in my view, not to transform the economy but to create a black political class that is in alliance with the conglomerates and therefore wants to maintain the status quo.”

Mbeki described five features of that status quo:
 The economy has a strong built-in dependence on cheap labor;
 It has a strong built-in dependence on the exploitation of primary resources;
 It is strongly unfavorable to the development of skills in our general population;
 It has a strong bias towards importing technology and economic solutions; and
 It promotes inequality between citizens by creating a large, marginalised underclass.

The strategy’s contradictions have been unmasked on many occasions, including the August 2012 Marikana Massacre, in which Lonmin tried to end a platinum workers’ wildcat strike when South Africa’s current Deputy President (and then 9% Lonmin owner) Cyril Ramaphosa emailed in a request for ‘pointed’ police action against the ‘dastardly criminals,’ which resulted in 34 shooting victims the next day.

But now many companies responsible for capital flight and corruption, extreme labor exploitation, mining disasters and rip-offs in the region are finally coming under a harsh spotlight.

Because of these practices as well as the mining industry bust, the share of company tax within total state revenue dropped from 27% in 2008-09 to 19% last year, as only a quarter of 653,000 companies in South Africa reported taxable income. In contrast, South Africa was scored as having the third highest profit rate in the world by the International Monetary Fund IMF
International Monetary Fund Along with the World Bank, the IMF was founded on the day the Bretton Woods Agreements were signed. Its first mission was to support the new system of standard exchange rates.

When the Bretton Wood fixed rates system came to an end in 1971, the main function of the IMF became that of being both policeman and fireman for global capital: it acts as policeman when it enforces its Structural Adjustment Policies and as fireman when it steps in to help out governments in risk of defaulting on debt repayments.

As for the World Bank, a weighted voting system operates: depending on the amount paid as contribution by each member state. 85% of the votes is required to modify the IMF Charter (which means that the USA with 17,68% % of the votes has a de facto veto on any change).

The institution is dominated by five countries: the United States (16,74%), Japan (6,23%), Germany (5,81%), France (4,29%) and the UK (4,29%).
The other 183 member countries are divided into groups led by one country. The most important one (6,57% of the votes) is led by Belgium. The least important group of countries (1,55% of the votes) is led by Gabon and brings together African countries.

http://imf.org in 2011, before the crash of commodity prices which left coal, gold, platinum and iron ore prices collectively 45% cheaper by the end of 2015.

The share values of most mining houses have likewise shrunk by half or more, with Lonmin deepest in the pits at less than 0.1% of its 2007 peak share price. In November, a $407-million rights issue was undersubscribed by 30%, leaving the company’s total share value worth just $200 million today. The South African state is jumping in with ‘lemon socialism’ financial underwriting, via a civil servants’ pension fund. But that once-mighty mining house, which was in 1973 termed by British Prime Minister Edward Heath “the unpleasant and unacceptable face of capitalism,” appears ready for the graveyard.

As for the Anglo American Corporation, which was Africa’s largest firm for the past century, its current London Stock Exchange price gives it just 8% of its share valuation peaks in 2008 and 2011. To please investors, it announced a downsizing of two-thirds of its staff. And in another personal reflection of the industry’s chaos, Ivan Glasenburg, the South African owner of what was once a $10 billion share of the world’s largest commodity trader, Glencore, finds it now worth just $1.7 billion.

Even though the decline in mining’s contribution to South Africa’s GDP has only fallen from 8.7% at its recent peak in 2011 to 7.2% in 2015, the mining and smelting industries are flat on their back, with electricity consumption so low, as a result, that South Africans have not suffered load-shedding black-outs in months.

Sub-imperial capitalists meet their match

Investments by South African capital up-continent are showing some of the same trends, especially mining houses, retail and cellphone firms. The latter witnessed the most spectacular one-year loss in African history when in November the continent’s largest communications firm, Johannesburg-based MTN, was fined $3.9 billion by Nigerian authorities for having failed to disconnect more than five million of its phone lines for which people did not provide state-sanctioned identification.

In one such case, a high-profile politician’s kidnapping by Boko Haram was negotiated on one of the phone lines, making MTN the subject of terrorism-facilitation accusations. The firm was also recently shown to have illegitimately channelled billions of dollars from South Africa, Uganda and Nigeria to Mauritius offshore accounts, during Ramaphosa’s term as chairperson.

MTN is also being questioned by the Nigeria Communications Commission for its acquisition of a band on the 700 mega-hertz spectrum, which the firm’s critics say reveals, as The Guardian put it, “the undue influence and interference of the South African telecom and broadcast monopolists in the nation’s digital broadcast industry in order to acquire domineering leverage Leverage This is the ratio between funds borrowed for investment and the personal funds or equity that backs them up. A company may have borrowed much more than its capitalized value, in which case it is said to be ’highly leveraged’. The more highly a company is leveraged, the higher the risk associated with lending to the company; but higher also are the possible profits that it may realise as compared with its own value. .”

The other major Johannesburg cellphone firm with regional interests, Vodacom, is being sued for $14 billion in the Democratic Republic of Congo courts by the controlling shareholder of its partner operating company. There is an additional legal process in the same country, also with a $14 billion claim, over a contested facilitation fee. Even if these are ultimately judged nuisance suits aimed at harassing the South Africans, they reflect a growing vulnerability that was also seen in physical confrontations last May.

At that point, Johannesburg-based firms – including MTN in Nigeria – suffered blowback campaigns in several African countries, as the xenophobic attacks “raised long-held resentment towards South Africa,” according to Business Day commentator Diana Games. Sasol sent hundreds of Durban workers home from Mozambique for safety’s sake.

In Harare, the Black Business Forum and Zimbabwe Exiles Forum began antixenophobia court proceedings against the Zuma government because, they said, “South Africa’s hegemony in many African states was significant. MTN, DSTV, Standard Bank, First National Bank, and Shoprite, for example, realised more revenue from the African states than the domestic market.”

Even under such volatile, high-risk conditions as MTN has faced, what drives these firms inexorably deeper into the region – just as is the case with other BRICS-based corporations – is the deep stagnation in the home market amidst intense international competition. This is illustrated in the notoriously corrupt construction industry where increasing profit shares are emanating from South African firms’ African operations. Four stages can be seen in the case of the cement industry, as an example.

First, within South Africa, the industry retains sufficient persuasive power with the state for the largest cement producer, PPC, to demand and receive tariff protection from foreign sellers. Pakistani cement competitors were recently rebuffed through antidumping duties that had the effect of cutting imports by 30%.

But second, this protection from imports also intensifies the local overproduction problem at home, because new market entrants arrive, complains PPC chief executive Darryll Castle, to “apply pressure on existing producers” through “depressed domestic cement prices.”

Then, third, facing local overproduction, the export of capital is vital, for “It has also partly driven PPC’s expansion into Africa with a new plant commissioned in Rwanda in August and further plants scheduled to be commissioned in the Democratic Republic of Congo and Zimbabwe towards the end of next year.” As Castle explained, “the strategy remains focused on becoming an African major – creating alternate income streams and reducing our risk by extending our footprint to the rest of the continent.”

What PPC needs for success, “against the backdrop of a turbulent world economy, increasing cement capacity and falling cement selling prices across the African continent,” Castle continued, is “disciplined cost management, innovation and the efficient delivery of large projects.” PPC has the economies of scale and ability to ‘predatory price’ its way into the African markets, and the region’s mega-infrastructure projects, often driven by South African grandiosity and financed by the Development Bank of Southern Africa, have been beneficial.

The retail circuit has also been extremely profitable given that South African firms’ economies of scale wipe out their African competitors. But contradictions are always close to the surface, and in one of the very highest-profile moves, Tiger Brand’s attempt to enter Nigeria finally ended in defeat in November, with a $122 million loss. The continent’s richest man, Aliko Dangote, bought back a flour mill he had sold the South Africans, for just $1.

The demise of the overhyped Africa Rising narrative is now imprinted on the continent’s currencies, with Mozambique and Zambia losing more than 35% of their worth against the US dollar in 2015, and Angola, Ghana, Namibia, Nigeria, Tanzania, Uganda and South Africa more than 20%. The latter’s sub-imperial role was often measured in the funds that Johannesburg corporations could extract in the countries to their north, before moving them abroad. But potholes on this road are now becoming obvious, with Africa’s oldest bank, London-based Barclays, reportedly fed up and putting its £3.2 billion stake up for sale.

The formula for South African capital in the rest of Africa may be reaching its sell-by date: use much greater size to destroy competitors, all the better to repatriate profits to Johannesburg amidst growing transfer-pricing controversies, thus creating all manner of pressures for the sub-continent, and leaving in its wake more economic refugees from Zimbabwe, the DRC, Malawi and other sites, who in turn come to South Africa and contribute to pressure on wage levels, which is one of the root causes of the ongoing outbursts of xenophobia (such as occurred in 2008, 2010 and 2015).

Neo-colonial collaborationism and last-gasp hedonism

In 2015, two unrelated debates raged about how to British colonialism found allies in KwaZulu-Natal Province, within a few hours of Durban. As Jacob Dlamini has shown, the 1879 destruction of the Zulu kingdom implicated Zuma’s ancestors: “The British needed far more than their sophisticated weapons and training to defeat the Zulus. They needed collaborators.”

Amongst the most destructive were the Nxamalala clan (Zuma’s relatives), who were allegedly granted land at Nkandla where Zuma’s notorious rural palace (South Africa’s most expensive mansion) was built in recent years. That palace is controversial because $16 million came from the taxpayer’s pocket, for what were justified as ‘security upgrades,’ such as a swimming pool renamed a ‘fire pool’ and a cattle kraal.

The history is contested, but in the main defence of Zuma to date, his spokesperson Bongani Majola weakly rebutted that the Nxamalalas should not be blamed, since “The collaboration of black people with white colonial power was certainly not a phenomenon that began with the Anglo-Zulu War.”

Nor did it end there, because the power of the British Empire was so seductive that Mahatma Gandhi’s and Jan Smuts’ subservience were also decisive in South African history. Coming to Durban in 1893, Gandhi worked mainly for Indian merchant capital in Durban and Johannesburg, becoming a tireless campaigner for Indian rights.

But he did so with the kind of collaborationist spirit that can be found littered across a new book by Ashwin Desai and Goolam Vahed, The South African Gandhi: Stretcher-Bearer of Empire. As Gandhi himself wrote, “The great British Empire has not risen to its present proud position by methods of oppression, nor is it possible to hold that position by unfair treatment of its loyal subjects. British Indians have always been most devoted to their Sovereign, and the Empire has lost nothing by including them among its subjects.”

Global neoliberalism is the contemporary version of that overarching Empire. Replacing Queen Victoria and Cecil Rhodes are personalities and firms deploying the Brazil-Russia-India-China-South Africa BRICS sub-imperial fusion of neoliberalism with a more extreme commitment to extractive industries.

Indians and Chinese have been the main buyers of South African coal exports, but both markets are saturated and the price of export coal has plummeted 60% 50 since 2011. Indian and Russian tycoons Lakshmi Mittal and Roman Abramovich own the two largest local steel foundries, milking Arcelor-Mittal and Evraz Highveld into near-bankruptcies. As Pretoria’s Industry Minister Rob Davies complained of Arcelor-Mittal last August, “A lack of maintenance, capital equipment and upgrades to aging plants contributed to seven catastrophic plant breakdowns at various of its plants across the country.”

But easily the most notorious of the new generation of exploitative investors in South Africa is the Gupta family from India. Last September’s replacement of Mining Minister Ngoako Ramatlhodi with an inexperienced politician close to the Guptas was just one indication of their power, far more important than their landing a wedding-party airplane from India at the main air force base in 2013, without immigration distractions.

As explained in copious detail by the left opposition Economic Freedom Fighters’ deputy president Floyd Shivambu – who before expulsion from the ANC was extremely close to Zuma’s patronage system – “Nene was removed to open space for the Gupta-led syndicate to loot State resources for private enrichment. The reality is that for some time now, South Africa has been under the management of a criminal syndicate masquerading as genuine business people.” Shivambu terms Zuma “the colonial administrator of the Gupta empire,” just as Bantustan leaders were apartheid’s local collaborators. There are many others, says Shivambu: “In their network of influence, they have premiers of the Free State and North West provinces, ministers, chairpersons and Chief Executive Offices of state-owned companies. They also have control over many critical decisions that will financially benefit them and the puppets they control.”

So the traditional white multinational-corporate looting of South Africa has been joined by a new Global South elite, and although Chinese state capitalists and Brazilian corporations have not made the same impression – lacking egregious Trumpish personalities like Mittal, Abramovich and the Guptas – the entire BRICS project fits within, not against, global neoliberalism and its tendency to accumulate by dispossession. China, in particular, is now stumbling in Africa in spite of recent hype.

But finally, back to the contradictions of white settler-capital. What with residual exchange controls blocking institutional investor funds from exiting South Africa, the local stock market chancers became downright giddy because ironically, the Johannesburg Stock Exchange (JSE) soared to unprecedented levels once Zuma took office in May 2009. Only Indian stocks outperformed South Africa’s from 2009-15, and in the 2007-13 period, no stock markets in any major economy came close. The JSE boasted a 15% average annual return from 2011-15, even as commodity prices plummeted, for only 12% of the JSE is comprised of mining shares.

By 2015, with a market capitalization at fully 320% of the GDP level (the ‘Buffet Indicator’), the JSE was the highest ever recorded of any major country’s modern stock exchange, with only Singapore (304%) and Switzerland (281%) in the vicinity. From early 2009, that vast gap between share prices and the underlying economic reality became not a measure of success but of lunacy.

The “Tobin Q-index” (named after Nobel Laureate James Tobin) measures the difference between share prices and the listed corporations’ asset Asset Something belonging to an individual or a business that has value or the power to earn money (FT). The opposite of assets are liabilities, that is the part of the balance sheet reflecting a company’s resources (the capital contributed by the partners, provisions for contingencies and charges, as well as the outstanding debts). replacement value. On the JSE, the long-term Q-index average is 1.45, but at liberation in May 1994, it was just 1. Consistent with global stock market crashes in 1998, 2001 and 2008, the Q fell back repeatedly but remained on an upward trajectory. In 2009 the measure was 1.4, and by early 2014 (the last measurement available) it had soared to 2.6. By now, the speculative bubble Speculative bubble An economic, financial or speculative bubble is formed when the level of trading-prices on a market (financial assets market, currency-exchange market, property market, raw materials market, etc.) settles well above the intrinsic (or fundamental) financial value of the goods or assets being exchanged. In such a situation, prices diverge from the usual economic valuation under the influence of buyers’ beliefs. in the stock market has reached more than twice its historic height.

Is it time for another crash, given how nervous and unpatriotic South African capitalists have recently become? No, tellingly, there is at least one final hedonistic blast anticipated from Johannesburg’s small army of financial speculators.

In mid-January, the US multinational corporation Anheuser Busch breweries will list on the JSE, and in the process that will raise the market’s $880 billion valuation by 25% as residual local shares of SABMiller – its latest takeover victim – are bought and retired. At that point a full third of the JSE’s value will emanate from beer and cigarettes (thanks to British American Tobacco’s current leading share valuation).

What better indicator of self-destructive capital? In ranking societies’ abuse of alcohol, the World Health Organisation considers South Africa the fourth most risky population on earth. What with all the booze adverts we are subject to here – which are the target of potential regulation by the ANC’s least-compromised leader, Health Minister Aaron Motsoaledi – ordinary people will continue suffering, drowning their sorrows, until they sober up and turn leftwards.

After all, as Vavi remarked in his critique of the musical-chairs episode, “For workers it does not matter if it is Pravin Gordhan or Nhlanhla Nene as Finance Minister. All of them, from 1994 onwards have been using the same medicine in different bottles. That medicine is austerity, and it is lethal, and will not cure poverty or unemployment.”

But for austerity to be reversed in 2016 by a growing cohort of post-ANC progressives in civil society and parliament aiming to rebuild a society taking us far beyond the current roller-coaster capitalism, will require a new spirit of alliances. Last October a taste was provided by university students who joined outsourced workers in unity. Their push from campuses into nearby communities to protest is a reflection of the need to occupy new physical spaces. And their rapid scaling up of protest targets – the finance minister’s budget speech in Cape Town one day, the ruling party’s Johannesburg headquarters the next, and the president’s Pretoria offices the day after – remind that the post-apartheid era of localistic, inside-the-silo campaigning must be urgently augmented by a new national liberatory politics.