Wrestling With Nationalisation - Political Showmanship

The latest round in the ideological wrestling match over nationalisation of mining has led to a nasty exchange between ANC Youth League leader Julius ‘the Mouth’ Malema and Jeremy ‘the Poet’ Cronin worthy of those delightfully staged World Wrestling Association entertainments we see regularly on television. Like those shows, I would suggest that its 70% rhetorical bluster and 30% scripted ‘action’.

A close look at the facts should disabuse us of the rhetoric. The mining industry is in trouble. Extraction of increasingly scarce non-renewable minerals is expensive and difficult compared to what it was years ago. Labour law and union militancy makes extraction even more economically difficult for the big mining companies. In a few years nationalisation of mining in South Africa might even be a boon for the companies, who can take their capital (much of which is already offshore) elsewhere.

Based on observing broad economic trends, I am also sceptical about the capacity of nationalisation to deliver the goods to the poor, ‘the African majority’ that comrade Malema refers to in his statements. My scepticism is two-fold: based on the notion of redistribution and on the particular South African practice of redistribution.

Redistribution of wealth and resources is posited on the notion that this will through investment generate wealth. The trouble is this does not happen. Most people spend windfalls on consumer goods. Even where assets are redistributed many are unable to benefit through lack of skills necessary to use assets profitably. The classic example has been land redistribution: lacking skills, land is poorly used, producing at best subsistence, at worst the ruin of resources.

Moreover, the last fifteen years has seen very little effective redistribution. A new middle class has emerged through Black Economic Empowerment (BEE) but it has been limited to a few, most of them close to the new ruling party. There has been little improvement in the lives of the poor majority, who remain outside the new economy and have little opportunity to enter it through an education system which does not adequately prepare them for acquiring practical and technical skills for making a decent living. Education, like wealth, is maintained and circulated within an alliance of old and new elites.

We should also ask: Are existing parastatals really effective? While certainly not against state control over essential services to the common good, a point I share with Pope Benedict XVI if I read his new encyclical (and the broader tradition of Catholic Social Teaching) correctly, I am also not naive about the poor performance of state-owned corporations like Eskom and SAA. It is also interesting to see how CEOs of these companies award themselves bonuses and fat salary increases despite poor performances that would probably get them sacked in the private sector.

To return to my WWA image, the cynic in me says that like the television show we are seeing a performance on the part of Julius Malema. He is the acceptable voice of a ruling elite who maintain a populist campaigning veneer to keep the masses in line while not really producing an effective or realistic programme for economic empowerment. Like the TV show it’s all staged – the rhetoric, the fights, even the wins – which a frustrated audience partly believes, partly knows is theatre.