ON FINANCIALIZATION, GLOBALISATION AND NEOLIBERALISM!

Wall Street

If the incident that took place in the state president’s office in December 2015 is anything to go by, South Africa’s governing elite is truly and deeply in trouble – they are walking gingerly on a path strewn with banana peels.  They must lead the country and manage the state as per the democratic vote, and in office they must also bow to the dictates of global financial capital and its usury economics. The ruling political elites have to know and tell the people – which is which?

The incident is a free lesson on the harmful effects of the hegemony of the US dollar and the age of global financialization.  They both supersede the self-determination of a people, and come to control their sovereign economy.  This also implies, in the South African case, that a lame duck state president who has no clue how the world works, will be forced to operate like a puppet on a string, with no choice of his own, and without the free will to lead and determine the destiny of the state and all its citizens.

The International Age of Finance

The age of financialization has been described as the period from the 1970s to the present, wherein a marked shift has occurred in economic activity from production to finance.  Capitalism works with an increased role for finance and usury, above that of the real economy of industrialisation, agriculture, plus goods and services.  University of London economist Costas Lapavistas in his seminal title, Profiting Without Producing: How Finance Exploits Us All (Verso: 2013), argues for a return to sovereign currency.  He states that real wages have become flat and stagnant in this period with the result that the standard of living is kept up temporarily by household debt.  The working people and the lower middle class merely survive on the loans they have taken.  We must add the view that in emerging and developing economies, financialization – through the state – has generated inequality, unemployment and poverty.

The South African treasury department is the powerhouse running government, with strong but subtle political and economic backing from the global financial markets.  Since 1994, the ministry of finance assumed a special position in the state apparatus, with unquestioned autonomy to implement neoliberal fiscal policies and to unilaterally engage global lenders on behalf of the state. There has been a recorded increase of the odious debt the country owes to international financial capital.  The government borrows and borrows without end.  Financialization has however played a leading role in the decision making process from the onset of the post-apartheid government.

The Charterist Congress Leadership Sold Out

Nelson Mandela’s cabinet inherited Derek Keys as finance minister from the apartheid authorities.  Keys had been a former Industrial Development Corporation (IDC) strategist and Gencor’s executive chairman.  When he resigned in July 1994, Mandela appointed the chief executive officer of Nedcor Bank, Chris Liebenberg, to head finance.  These men represent big business, and they operated the country’s finances with a free hand, above and over the governing party’s influences.  Thabo Mbeki flavoured his terms in office with popular concepts of African Renaissance and the New Partnership for Africa’s Development (NEPAD) for the African continent, with South Africa as the gateway for foreign investment. Mbeki left the overarching influence of financialization, globalisation and neoliberalism intact. His finance minister was the affable Trevor Manuel, a super salesman who left a remarkable record in office.  He led the ‘comrades in business’ movement of the new politics of the stomach. The inept Jacob Zuma brought on Pravin Gordhan, Nhlanhla Nene, Des Van Rooyen and Gordhan interchangeably – burning his fingers in the process. He seems to have no clue of what goes on in the state vis-a-vis the power of global capitalism.

The Charterists have stealthily made the state treasury and the financial markets the nerve centre of everything in spite of the evidence that financialization has stifled economic growth in imperial centres where it originates, and it has caused the crises of capitalism since the sub-prime meltdown in 1998.  The increasing inequality between the wealth of high net worth families and the measly income of working people is obvious to every observer of socio economic matters. The international bourgeoisie no longer own the means of production directly, they now own the patents and the copyrights to the brands they sell and they also own the money in the banks.

To sustain their continued electoral support base, the Charterist Congress leadership has cunningly offered the masses a sop to calm them down with the swan song of poverty, unemployment and inequality.  Neoliberal technocrats use these terms to mystify the causes of continuing oppression and to explain away serious global challenges facing the nation.  Typically, the Congress leadership are wont to address the symptoms and outcomes, but they will never attend to the source and the root cause itself. In reality, they have committed themselves body and soul to the unholy tripartite alliance of the world’s chief exploiters – financialization, globalisation and neoliberalism.

They are unable to extricate SA from this erroneous commitment, and have gone on to defend their own political blunders with ferocious intensity, as it is clearly shown with the August 2012 state repression that resulted with 34 mineworkers killed by the police for demanding decent wages and safe working conditions from Lonmin platinum mines in Marikana near Rustenburg.

The Unholy Trinity

The working people of Azania must understand that the modern struggle is waged primarily against globalisation, which is the domination of an unfettered world monopoly capitalist system in all the countries on the globe where they extract mineral and other resources almost scot free; neoliberalism, which increases the powers of the international corporate conglomerates and promotes local exploitation of the people and social injustice; and, financialization, which restricts the economy from manufacturing and producing things while it makes money from money for the benefit of a few in the financial markets. These are the unholy trinity bedevilling the well-being of the world.

Radical, moderate and conservative economic theorists have condemned ‘the financialization of the capital accumulation process’, wherein big business becomes like private banks, creaming off the surplus value to make money from money;  without creating jobs in the real economy and redistributing wealth and income.  Monopoly capitalism is viewed as a mode of force exercised through the economy to control nation states from the imperial centres of Washington, Bonn, London and Tokyo against the periphery in the geopolitical areas of Africa, South America and South East Asia. The force they use is a source of destabilisation and underdevelopment.

A 2010 report by the Bank for International Settlements (BIS) indicates that profits from the world financial markets have soared from 10% in the mid seventies to above 40% in the new millennium. In everyone’s book, this is gross profiteering at the expense of the emerging and developing economies at the periphery of the world imperial centres.  Profiteering is an exploitative and unjust method of doing business, in any language.

What they did in Zimbabwe

The structural adjustment programmes enforced on the emerging and middle income economies has had deleterious effects, engendering widespread corruption and social instability.  The concept of ‘regime change’ pushed by the US State Department as a stick to beat the ‘truants’ into compromise is anti-democratic.  Its true intention is to subvert the ability for self-determination of the African people, especially.  Zimbabwe, for example, was the bread basket of southern Africa when it adapted to globalisation and financialization in 1990, opening up to excessive privatization of markets and trade by lifting protection of the national economy.  Zimbabwe quickly sunk to a basket case and assumed junk status in the eyes of neoliberal hedge funds, pension funds and asset managers who trade in the securities exchange market.  The managers are prevented by policy from investing in so-called junk countries, in a global foreign exchange trade that commands a daily turnover of US $4 trillion.  They can wipe out a weak government in four days.

From the point of view of a liberation movement that fought and won the war of national liberation, ZANU (PF) regards the machinations of financial markets as a back door entrance to take over the country from its indigenous owners.  Progressive Africa finds it difficult to argue against this political stance.

President Jacob Zuma’s moment of madness in December 2015 put South Africa on a knife’s edge, with a variety of analysts seeing doomsday breaking in at any moment.  The powerful financial markets were withdrawing from South Africa very rapidly, with the rand losing the value of its currency in relation to the US dollar in levels never seen before.  The comfort zone of the governing elites was unsettled.

The spot of bother for us in the Pan Africanist Congress (PAC) is the inadequate attention the national question has been given in addressing the new political dispensation in a democratic South Africa.  The governing elite has papered over the cracks, but they fell short on the strong will and political acumen to build an independent and free African Nation.

By Jaki Seroke

The writer is a PAC stalwart and Chairperson of the Pan Africanist Research Institute (PARI).

 

  • Jaki Seroke

    Corrections: The meltdown in the US economy happened in 2008 (not 1998) when the CEO of Lehman Brothers, Dick Fuld, applied over-investment in the proper market at the time when the housing bubble was about to go bust. The Federal Reserve’s Allan Greenspan had deregulated the financial market – which led to the glut and the inevitable meltdown. Lehman Brothers collapsed. And so did others in the domino effect – this was the latest crisis of global capitalism.

  • Sam Ditshego

    Well put Jaki. What happened last year with the plummeting of the rand happened in France in 1981 when the democratic socialist government of Francois Mitterrand tried to implement policies the international money power did not like. They withdrew all their money causing the Franc to nosedive, forcing the Mitterrand government to review its policies these “investors” bragged about it as I pointed out in my 16 August 1996 article in the New Nation. The governing elite do not want to learn. Let me go back sixty seven years ago and quote from Robert Sobukwe’s speech on behalf of the graduating class at Fort Hare when he said, “We are seeing within our own day the second rape of Africa; a determined effort by imperialist powers to dig their claws still deeper into the flesh of the squirming victim. But this time the imperialism we see is not the naked brutal mercantile imperialism of the 17th and 18th centuries. It is a more subtle one – financial and economic imperialism under the guise of a tempting slogan, ‘the development of backward areas and peoples'” Is it not clear that Sobukwe was warning us against financialisation, globalisation and neoliberalism? As I have consistently argued, Sobukwe’s ideas can go a long way in solving our current problems. However, the governing elite hates Sobukwe with a passion and consequently they are trying their damnest to expunge the name of Sobukwe from history textbooks in order to erase his memory from the collective consciousness of the African people at home and abroad.