TO WIN FREE EDUCATION, FOSSILISED NEOLIBERALISM MUST FALL
To Win Free Education,
Fossilised Neoliberalism Must Fall
By Patrick Bond
version forthcoming in S.Booysen, D.Motsepe, D.Everatt and P.Pillay (Eds),
The #FeesMustFall Student Revolt: Challenging and Changing Governance in South Africa
Johannesburg, Wits University Press, 2016
The most inspiring and surprising social movement to shake the South African state since the Treatment Action Campaign of the early 2000s was #FeesMustFall in October 2015. The primary demand – free tertiary education – is audacious. There are various cost estimates, depending upon demand-related assumptions or simply the prevailing political agenda: a spokesperson of South African Higher Education Minister Blade Nzimande (who was at the time opposed) estimated R100 billion/year, although the 2013 figure from the same office was just R23 billion (i.e. R27 billion in 2016 inflation-adjusted rand) (Petersen, 2015). But even the centre-right Democratic Alliance estimated in late 2015 that free (albeit means-tested) tertiary education would cost R35 billion per annum (Bozzoli, 2015). The students’ secondary, immediate demands were that there should be a 0% fee increase in 2016 (effectively a 7%+ decrease in fees given rising inflation) and that all university staff should be paid properly and ‘insourced.’ The early 2000s’ outsourcing of low-paid cleaning, security, gardening and similar staff at most institutions was repeatedly contested before 2015, but never successfully.
As argued below, these tens of billions of rands that should be considered for investment in the students’ future compare favourably with hundreds of billions allocated by state agencies to mega-projects that are largely fossil-intensive (especially based upon coal and oil). The resulting climate change will irrevocably harm the current student generation’s future. But will the students come to this realisation, and will it lead to creative political strategies that link issues and constituencies with just as radical a potential as was witnessed in 2015?
Unfortunately, the exceptional mobilisation in October 2015 had degenerated, at the time of writing in April 2016, to a situation characterised by divide-and-conquer student defeats at the hands of the ruling party and its ‘Progressive Youth Alliance’ (PYA) allies. The latter had control of most Student Representative Councils which in 2016 insisted that there be no further disruptive #FeesMustFall protests on the scale of October 2015. Meanwhile, opportunities to broaden the movement in relation to service delivery protests and the new left trade unionism were not being explored to the extent required. Socialist Youth Movement leader Trevor Shaku (2016) called for a reconstituted Free Education Movement, for, he claimed, the main problem with #FeesMustFall was that,
the adventurist and populist leadership have, with lack in clear revolutionary tactics and strategies, mismanaged and thus ruined the favourable moments for harnessing the momentum. The results have been despair in what could have been nourishing of confidence for future local campaigns, and certainly national campaigns like free education. Recognising all this, the government tried to turn the concession forced out of it to its advantage by trying to drive a wedge between the mass and the militant minority… the movement must link itself with other civil society movements fighting in the two other theatres of class struggle – communities and workplaces.
The despair should not be terminal, because in October 2015, just such alliances had been forged on campus, and to the amazement of much of the society, the students’ and workers’ secondary demands were largely won within months. President Jacob Zuma announced a 0% fee rise for 2016 after his Union Building offices were besieged on 23 October 2015. In part because of the race and class backgrounds shared by most university students and workers, their common cause led to a string of insourcing victories. In only a few universities, (self-acclaimed impoverished) managers have been slow to agree on insourcing or have been duplicitous in its implementation, and in one high-profile incident, workers and PYA students at Tshwane University of Technology physically fought each other due to a February 2016 labour strike that briefly prevented student access to campus.
However, an era of apparent university austerity is one adverse unintended consequence of the students’ short-term success, since the R2.3 billion additional 2016 funding for 0% fees was not sufficient for all the additional costs, e.g. repairing several hundred million rand worth of damage allegedly done by student protesters in 2015-16 (though insurers pick up the bulk of that), or insourcing expenses. The latter were estimated by UKZN management alone at R80 million/year following a dramatic increase in wages for lower-paid workers to a R6000/month average.
Renewed battles with Treasury loomed, for in February 2016, the most important constraint emerged to fulfilling the prior October’s promises: national fiscal austerity. In turn, that austerity slows – and potentially reverses – two costly processes underway since the mid-1990s: making universities more racially and gender diverse (some are outrageously skewed, e.g. the University of Cape Town (UCT) with no black African women professors of South African citizenship out of more than 250 senior faculty), and making them more internationally competitive in terms of research output (which had skewed funding from government and universities towards incentive-based payment systems to reward high publishing levels). The onset of university austerity is not surprising, for as Wits School of Governance visiting professor Graeme Bloch (2015) claimed in The Conversation, “There are many problems for the government, including the state of the world economy, which ensures that there is not enough money” for free university education. Moreover, although a major commission studied the matter for Higher Education Minister Blade Nzimande, the report was buried for three years (Petersen, 2015). This, in turn, reflected the (former Communist) Finance Minister Pravin Gordhan’s vulnerability, for as a newspaper revealed in November 2015,
Asked … why the findings of the report [about free tertiary education] and government’s decision not to implement the policy were not released to the public in 2013, [Nzimande’s spokesperson] replied: “It is a public document, but due to the nature of the report, we decided not to make it public. Obviously we would have been setting the finance minister up against the public if that decision and report was released” (Petersen, 2015).
If so, then can the finance minister can be more transparently understood (‘set up’) by students, when he is working ‘against the public’ interest, in contrast to the interests of South Africa’s massive fossil-intensive industries (which continue to get generous state subsidies notwithstanding their role in planetary destruction) and international financial markets? The latter are ably represented by the Moody’s, Standard&Poor’s and Fitch ratings agencies which put enormous explicit pressure on Gordhan to lower the budget deficit in 2016, or by the likes of Goldman Sachs, Absa and Investec which have more implicit, backroom persuasion techniques. Along with the Chinese state, whose ownership of Standard Bank suffered a large devaluation (Bruce, 2016), the latter three institutions’ local chief executives were sufficiently powerful to be given credit for installing a new finance minister (Gordhan) in mid-December 2015, after another powerful network – the Gupta family and their patronage allies – had installed their candidate (Desmond van Rooyen) four days earlier.
In this context of debate over which corporations have succeeded in ‘state capture,’ the students’ partially-successful battle for greater funding from Treasury deserves full attention. In the next section we review the student forces arrayed against fiscal austerity and university fee increases in 2015, and disputes over whether the South African state is making a sufficient contribution to cover the cost of higher education. These critiques of state spending highlight aspects of state subsidies that harm the next generation insofar as they contribute to climate change, which will damage the current youth’s futures, as shown in section 3. Then, drawing on the 2016 budget, we can identify other constituencies currently suffering austerity, in section 4. Finally, in section 5, it is useful to ask (no matter if it is purely hypothetical), whether there is a scenario in which these forces unite to demand a different fiscal regime.
The question of an alternative narrative arises at a time of ferocious liberal attacks on Zuma and his Gupta patronage allies, and likewise by those forces on Gordhan (including threat of the finance minister’s arrest). The liberal attacks have been joined by many progressives within a ‘#ZumaMustFall’ movement that emerged immediately following the December 2015 finance minister shuffle, and that appeared likely to regain momentum after 783 corruption charges against Zuma were reinstated in April 2016. But the movement needed to consider the dangers of prioritising a good-governance agenda without reference (aside from the National Union of Metalworkers’ warnings) to the likelihood that a more neoliberal, anti-poor agenda would result if Deputy President Cyril Ramaphosa replaced Zuma. In the process, Gordhan was insulated from most public criticisms, since he and his deputy Mcebisi Jonas – also a former leftist – are widely recognised as the fiscally-responsible ‘good guys’ against the Gupta-related forces of state capture, nuclear spending and parastatal malgovernance.
As a result of this conjuncture, the most sophisticated and militant of the residual #FeesMustFall network, perhaps in alliance with South Africa’s numerous other left-leaning forces, might consider giving much greater attention to reviving the successful strategies and tactics of 2015. Those student innovations included 1) uniting with working-class and poor people (the outsourced university workers), 2) taking physical space (blocking roads near campuses), and 3) choosing targets that are national (not merely campus-based), including the Treasury. It is in these three strategic turns that the pressure on Gordhan can be increased, to make the hypothetical United Front of activists against neoliberalism – and with it, fossil-centric capital accumulation – potentially feasible.
In short, we will conclude, if the strong momentum gathered in October 2015 was quickly destroyed by a variety of political dilemmas, some of which were internal to the student movement, but some also external, at least one of the ways forward is for students and their civil society allies to better interrogate the power of financiers, mining houses and smelters – which are the beneficiaries of the budget at the expense of the students’ present and future interests.
ARGUMENTS FOR FISCAL INVESTMENTS IN THE YOUTH
The focus on the fiscus is terribly important (in part because it is so rare), and this was recognised by several thousand students who began national-scale #FeesMustFall advocacy on 21 October 2015 when they stormed the parliamentary precinct in Cape Town. It was the day of the budgetary mid-term review. Prior to Gordhan, the 2014-15 finance minister was Nhlanhla Nene, whose response that day – formally articulated in his Budget Speech – was that student protests were ‘unconstructive.’ The word was perhaps chosen by the Treasury’s neoliberal speechwriters; it scornfully reveals a vast distance between those championing the austerity logic in Treasury on the one hand, and on the other, the logic of the society’s ascendant leadership at the elite universities, as well as the logic of the 63% of society judged by UCT economists to be living below the poverty line (Budlender et al., 2015).
As Reuters (2015) news agency tellingly reported, Nene “downplayed the effect of university students storming parliament as he delivered his medium term budget on the credit rating of Africa’s most advanced economy. ‘What matters for the ratings agencies is our response as government in addressing these challenges,’ he said about the students’ demands to keep tuition fees unchanged.” The response taken by government’s security officials against the students that afternoon was described by many journalists as police brutality. Nzimande (besuited) told the students from behind a protective fence that they should accept a 6% increase as a victory. They booed him, and he later joked, “If these students don’t accept this, we will start our own movement, students must fall” (and after intense criticism, he subsequently apologised). Also revealing ‘what matters’, in February 2015 Nene had relaxed exchange controls, allowing wealthy individuals to take R10 million out of the country each year, up from R4 million, while at the same time cutting grants to poor people by 3% in real terms (Bond, 2015a).
Having made an exceptionally powerful statement, different groups of students then marched in their thousands to the Johannesburg and Durban headquarters of the ANC on October 22 and 23, and finally demonstrated – more than ten thousand strong – at Zuma’s Pretoria office on October 23. There, restraining fences were torn down by some of the activists. Tyres and latrines were burned, and police once again responded with stun grenades, rubber bullets and water cannons. Refusing to come out to address the crowd, Zuma instead held a press conference where he conceded to the students’ demand for a 0% fee increase in 2016 following several universities’ attempt to raise prices into double digits. (It was Wits’ 10.5% increase that on 4 October 2015 spurred the original national awareness of the crisis, although at UKZN two weeks earlier, the burning of the administration building was already an indication of extreme opposition to higher 2016 fees.)
In late 2015, Nzimande used adult and vocational education surpluses to fund most of the R2.3 billion required. In February 2016, the main state budget line item for ‘University Education’ was R39 531 603 000 (R39.5 billion), an increase of 21% from R32.8 billion in 2015, and with inflation in 2016 estimated at 7%, this amounted to a real rise of 14%. (Nene’s October 2015 medium-term budget had pegged an increase of just 6.3% annually – i.e. below inflation – for the coming three years.) No other major budget line item was boosted so substantially. The largest share of the increase, however, was not for operating grants, but instead the National Student Financial Aid Scheme (NSFAS) which, largely in loan form, anticipates repayment. Its budget allocation rose 78% from R6.3 billion to R11.2 million (after inflation, a 71% rise). But the loans must be repaid, a process the NSFAS has reportedly found extremely difficult to enforce given how many people graduate from university without job prospects.
Even with such a large increase, the amounts appear to be well short of a reasonable state contribution to higher education. The 2013 Report of the Ministerial Committee for the Review of the Funding of Universities found that state “funding is not sufficient to meet the needs of the public university system… Government should increase the funding for higher education, to be more in line with international levels of expenditure” (Department of Higher Education and Training, 2013). The same mandate to correct the universities’ race and class access bias came from Ramaphosa (2015) at the October 2015 higher education summit in Durban:
Africans account for 79% of the population in the country, yet their gross participation rate in higher education is less than 15%. The low participation rate of the majority of South Africans is untenable – both from a social justice perspective and in terms of meeting the demands of the 21st century and the needs of our economy. Higher levels of funding and the expansion of the capacity of the higher education system will be needed in future to ensure that higher levels of participation of African and coloured students are achieved.
A statement released simultaneously by the Democratic Alliance’s Belinda Bozzoli (2015) concurred:
[the Ministerial Committee] found that South Africa’s budget for universities as a percentage of GDP was only 0.75%, which is lower than the Africa-wide proportion of 0.78%, the world-wide proportion of 0.84% and the proportion spent by Organization for Economic Cooperation and Development (OECD) countries of 1.21%. The report also noted that between 2000 and 2010, state funding per full-time equivalent student fell by 1.1% annually in real terms, while fees per each of these students increased by 2.5% annually in the same period… While President Zuma announced that a Task Team will be established to find short term solutions to student funding challenges, this Task Team will be set up to fail if it does not include representation from Treasury. More needs to be done, urgently.
The penultimate sentence is vital because even the centre-right DA – usually very supportive of the government’s neoliberal bloc – alleges that the National Treasury has been hiding during this ferocious debate. Behind the fiscal conservatism of Treasury (in Pretoria) are the men they report to in the biggest financial institutions and credit rating agencies (mostly in Sandton). But those men have experienced an exceptionally profitable period, and their ability to disguise profits through misinvoicing and related tax-avoidance techniques is well understood, though it continues apparently unabated. The students were making demands upon the state at a time the economy was slowing and fiscal revenues – especially from corporate taxation – were declining. But this is certainly one area where the broader class struggle could be pursued in future, with students joining many other constituencies to demand higher and more rigorous taxation, tightened exchange controls, and more courageous economic regulation of transnational and local corporations.
ARGUMENTS FOR NOT INVESTING AGAINST THE YOUTH
Until most of the mining and smelting corporations were nearly destroyed by the 2011-15 commodity price crash, large firms operating in South Africa enjoyed what the International Monetary Fund (2013) recorded as amongst the world’s highest profit rates. By many accounts, this was not honestly-acquired wealth, for according to surveys by PricewaterhouseCoopers (2016) in 2014 (Hosken 2014) and 2016, Sandton elites remain intent on committing economic corruption at the world’s fastest rate. In December 2015, the Washington NGO Global Financial Integrity (2015) recorded an average $21 billion in annual Illicit Financial Flows from South Africa from 2004-13, and in March 2016, the leaked ‘Panama Papers’ began to unravel some revealing relationships between South Africans and tax havens (albeit the tip of the iceberg). Several specific firms had been earlier named by activists and researchers as being guilty of invoice manipulations (‘transfer pricing’) and other tax avoidance strategies: MTN and Lonmin (both of which were led – as board chair and main minority investor, respectively – during the offshoring period by Ramaphosa), the other two major platinum firms (Implats and Amplats) (AIDC, 2014) and De Beers (Bracking and Sharife, 2014). The corporations do not pay a particularly high primary tax rate – 28% – compared to the 48% they paid during the last decade of apartheid, when exchange controls were the main way the state ensured capital stayed within the country. After 1994, deregulation of exchange controls occurred on more than three dozen occasions, a situation that could easily be reversed in line with international trends. For The Economist (2013) magazine proclaimed a newly ‘Gated Globe’ because of resurgent capital controls imposed by many countries following the 2008 turbulence, notably including China in mid-2015 and early 2016 as its stock market lost trillions of dollars in notional values.
Moreover, Treasury also funds many incentive schemes for corporations’ benefit, and these are utilised but without many obvious backward or forward linkages into the economy (such as cheap electricity to BHP Billiton/South32 and Anglo American Corporation, auto industry subsidies and the steel industry’s increased tariff protection). Were it not for state and parastatal infrastructure spending, the levels of gross fixed capital formation would be at record lows. Yet at the time students were protesting for more resources, South African corporations had acknowledged reserves of R700 billion in what was essentially idle cash, suggesting that the profit motive for the ‘real economy’ had become far too low, compared to what corporate treasurers can earn by parking their cash in speculative investments, e.g. in the Johannesburg Stock Exchange (which hit a record 55 000 index level in October 2015) and real estate (which outstrips nearly all world markets). There was certainly no shortage of savings in South Africa’s economy, given how rapidly the stock market’s and property’s value had grown as a result of speculative financial bubbles, at a time investment in the real economy withered.
To illustrate further, as a clear signal to students about where Treasury’s priorities lay, amongst the most generously subsidised projects are those in the state’s Presidential Infrastructure Coordinating Commission (PICC) programme that promote, first, exceptionally destructive coal exports via Richards Bay, mainly by multinational corporations; second, the Durban port-petrochemical complex’s expansion; and third, iron-ore exports. Yet there is vast world over-capacity in coal, shipping and steel, leaving South Africa’s second major steel producer in bankruptcy (Evraz Highveld) and the largest (Arcelor Mittal) sharply cutting back on its main foundries’ output. But these White Elephant mega-projects continue to get the lion’s share of state, parastatal and private infrastructure funding.
The PICC, led by Economic Development Minister Ebrahim Patel, will coordinate state spending of more than R1 trillion. Although there are excellent small-scale initiatives within the PICC’s Strategic Infrastructure Project portfolio, many of the largest are highly dubious and require more aggressive watchdogging by civil society. There is an aura around the word ‘infrastructure,’ no matter for what purpose, as if the state has an open-ended mandate to ‘build it, and they will come.’ The precise winners and losers are rarely interrogated. As former eTV head Marcel Golding revealed in his court battle over control of the station in 2014, Patel’s infrastructure mega-projects were promoted generously on eNews just prior to a national election in exchange for Patel offering set-top box tender favours to Golding (that were never delivered) (Bond 2014b). Given this extent of structured fiscal corruption, students can play an extremely useful role in society by drawing attention to the ways that state subsidisation of irrational mega-projects imposes opportunity costs – including foregone education funding – that deserve a rethink and then a budget reprioritisation.
To illustrate, Gordhan’s Budget Speech noted that “Transport and logistics infrastructure accounts for nearly R292 billion over the next three years under Minister Peters’ oversight. Transnet is acquiring 232 diesel locomotives for its general freight business and 100 locomotives for its coal lines.” But when the highest-priority PICC project – an expanded 464 km railroad link from the Waterberg’s coal fields in Limpopo to Richards Bay that will carry an anticipated 18 billion tonnes of coal over its lifespan – was envisaged, the price of coal was rising. It reached a peak of $170/tonne in 2008 but then dropped to a level in early 2016 around $50 per tonne. Transnet chief executive Siyabonga Gama estimated in 2011 that the rail line could raise the area’s coal exports from 4 to 80 million tonnes a year (Flak 2011). But even the industry’s leading insider expert, Xavier Prevost, admits coal exports had become a money loser by 2015 (Creamer’s Engineering News, 2015). (Cynics may argue that the subsidisation is critical to state-connected coal corporations such as the Gupta’s Oakbay and the former Ramaphosa firm Shanduka, or that the vast bulk of the spending is in KwaZulu-Natal, with the rail line running not far from Zuma’s Nkandla homestead palace.)
The second highest-priority PICC mega-project will also cost hundreds of billions of rands: the South Durban Dig Out Port (on the old Durban airport site). This project aims to increase annual shipping-container traffic from levels of 2.5 million (stagnant from 2010-16) to a new capacity of 20 million by 2040, according to the National Development Plan (other experts suggest 12 million is more reasonable). The project will also double oil refining capacity in South Durban (a residential area already saturated with toxins), with the new Transnet oil pipeline from Durban to Johannesburg originally estimated to cost R6 billion having been redirected from white to black neighbourhoods by then CEO Maria Ramos, ultimately costing R24 billion by the time it is complete in late 2016. Once again, the port expansion is being subsidised generously with taxpayer funds, yet the Baltic Dry Index – the main measurement of shipping demand and pricing – is at an all-time historic low, having peaked at above 12 500 in 2008 and fallen to below 300 by early 2016. Either the South Durban investments will become yet another of Durban’s white elephant projects (e.g. the airport, Dube Trade Port, Moses Mabhida Stadium and Point redevelopment), or if it is miraculously successful in raising the level of traffic by millions of containers in the coming quarter century, the project’s success will have the effect of deindustrialising many South African manufacturing zones adversely affected by the import wave.
In these two specific instances, the vast subsidies that Treasury and Transnet will provide to the corporate sector do not contribute to the present younger generation’s prosperity and environmental conditions. On the contrary, they are much more likely to harm their prospects, through climate change and through fewer labour-intensive manufacturing job opportunities. The student movement should easily be able to raise these as fiscal concerns, and they should resonate with the broader society. After all, in the Pew Research polls of South African public opinion, two issues have consistently ranked as the highest in the recordings of the society’s concerns about the world: climate change and international economic volatility (Carle, 2015). South Africans are justifiably concerned about carbon-intensive economies – of which theirs is amongst the world’s worst – and about local vulnerability to the kinds of global economic swings that reduce commodity prices and the value of firms operating in South Africa by such extreme amounts. Shareholders in Lonmin witnessed the price falling more than 99 percent from peak in the 2008-11 period to trough in 2015), Anglo American more than 90 percent and Glencore more than 85 percent.
These extremely desperate, carbon-intensive big businesses – especially the group Ben Fine and Zav Rustomjee (1996) termed the Minerals-Energy Complex (i.e. not just the Gupta family but the much bigger set of mining houses operating in South Africa) remain extremely powerful when it comes to subsidy allocations. For example, the world’s largest mining house, BHP Billiton (‘South32’, formerly South Africa’s Gencor prior to 1990s mergers), still gets electricity at 1/10th the price of ordinary consumers, and at peak, consumes 5% of the grid’s output. When the Energy Intensive Users Group of mining houses and smelters (responsible for 44% of consumption) needed an increase in electricity supply, Eskom turned to privatised electricity producers for renewable energy instead of using its own resources. And in spite of their reported opposition to a nuclear deal apparently struck by Zuma in Moscow in 2014, both Nene (2015) and Gordhan (2016) made a R200 million downpayment on what are likely to be Moscow-sourced Rosatom reactors that could easily cost in excess of $100 billion, as well as the first funding tranche for another pro-corporate investment, the BRICS New Development Bank, whose target capitalisation (spread among five countries) is $100 billion. One BRICS Bank director, Tito Mboweni, is on record that the nuclear deal “falls squarely within the mandate of the NDB” (Bloomberg, 2015).
In short, the students could readily have demanded – and still can – that the state and parastatal budgets be restructured to reflect:
• the students’ educational needs as a younger generation preparing for employment, so that the state’s human capital investment will be valued in a skills-scarce national economy;
• the collapse of the prices of many exported raw materials, which should, in turn, be reflected in a redesigned National Development Plan, PICC and Transnet infrastructure investments (the largest items mentioned in Gordhan’s February 2016 Budget Speech; Bond, 2016); and
• the danger that if such investments continue to be made, the MEC will grow stronger and the country’s contribution to climate change will also rise beyond the 34% cut in emissions (below ‘growth without constraints’) during the 2020s that was repeatedly promised by Pretoria negotiators at the United Nations climate summits, which in turn will endanger the country’s future as other countries also fail to honour their commitments (Bond, 2012).
UNITING WITH OTHER CONSTITUENCIES PEERING OVER THE FISCAL CLIFF
Students opposed to the low level of university funding and the simultaneous use of taxpayer funds on projects such as carbon-intensive infrastructure can at least make common cause with numerous social forces which are also firmly opposed to the austerity trend. These include those community activists and patients of the public health system who have been witnessing the degeneration of fiscal support in their sectors: municipal finance, housing, water and health care.
Again, consider the context, this time bottom up. The #FeesMustFall movement’s first short-term victory comes at a time that the ANC is confronting unprecedented economic pressure and social unrest. The GDP growth rate fell from just 1.5% in 2015 to an estimated 0.4% in 2016, at a time of a 1.3% population growth rate and no hope of an upturn in the foreseeable future. South Africa is the most income-unequal of any major country, and ‘tokenistic’ grant payments (e.g. R350/month for most beneficiaries, who are children), ‘Free Basic Services’ and an unfunded National Health Insurance make little or no difference, and sometimes (as in water provision) have had the opposite effect because of Pretoria’s social policy neoliberalism (Bond 2014a). The rise in social grant payments offered by Nene and Gordhan was consistently far below an inflation rate that by 2016 was anticipated in double digits for poor people, given much higher food, electricity and transport costs than affect wealthier South Africans. Anger has risen across the sub-altern spectrum, and in September 2015, the World Economic Forum (2015) judged the South African working class as the most militant on earth – the same position amongst 140 countries held since 2012, when 34 mineworkers were massacred at Marikana – not long after the South African Police Service had reported that in 2014, nearly 2300 protests turned “violent” (in police terminology) (Africa News Agency, 2015).
The August 2016 municipal elections will reflect how difficult the ANC has found either suppression or satisfaction of the protesters. Can students unite with their generational peers who are not in university, and who so regularly take to the streets against all manner of local grievances in the townships, shack settlements and shopfloors where most unrest is recorded? (The potential is certainly reflected in the way that cultural reflections of dissent, including use of fire and excrement, moved in 2015 from townships to campuses.) The possibilities of such unity were observable once, starting on 4 October 2015 at Wits, when the casualised university workers were explicitly identified as allies by progressive students. (Earlier attempts at such alliance-building at sites such as UCT and UKZN were not successful beyond a hand-full of student supporters of insourcing.)
But there are important reasons for caution. The rough class structure of black ‘African’ society usually is expressed in terms of a small but rising (and debt-encumbered) lower middle-class, the working-class and the huge unemployed and low-income majority (again, with a 63% poverty rate). The students generally come from the first generation of university attendees, and it is no insult to posit that they aspire to move from the working class to the middle class, or in the case of students at the technical universities, to acquire stronger artisanal skills. Their ability to view the ceilings they face and contest various aspects of the university education they receive, is reminiscent of the great massification of universities in Europe and North America during the 1960s, when many of the radical leaders were from first-generation, working-class backgrounds. That they reject the implicit promise of ANC rule, i.e. that they will have a guaranteed career and be black empowerment beneficiaries, is important in material and ideological terms. Their recognition that a university degree is certainly not a guarantee of employment, and their ideological antipathy to nationalist, populist politicians, together give these students the same kind of potential for national leadership that the 1950s ANC Youth League soon attained, breaking through ossified leaderships who fail to spell out the struggle in terms that the wider society is ready to listen to. That they take up ‘decolonisation’, raise ‘the Land Question’ and demand redistribution to address the entirety of persistently racist, sexist social relations also reflects this maturity.
However the danger remains that once the heat of battle subsidies the students will retreat to a relatively class-privileged position instead of pursuing this historic challenge of economic justice. Geographically, one of the main divide-and-conquer strategies adopted by the apartheid regime and big business for about a decade starting in the mid-1980s onwards, was to spatially segment the housing market and encumber the higher echelons of the black working class with debt (Bond, 2000, 2014a). The impact, today, is that many townships and shack settlements are no longer home to the higher-paid shopstewards and other experienced labour leaders who, in the 1980s, had been both worker and community activists, conjoining their union leadership with their roles in the SA National Civic Organisation. It was not atypical for the civic and trade union officials to wear two hats, and to turn their geographic segregation to advantage. The spatial compression of class, until the Group Areas Act was overturned in 1991, in turn allowed the progressive activists much more coherence in their anti-apartheid protests. Demands for access to water and sanitation, electricity, housing and transport regularly featured as combined worker-community protest rationales.
The political genius of neoliberalism lies, in part, in its fragmentation of opposition. The most important barrier to making generalised community demands against the Treasury since the mid-1990s has been the ‘popcorn’ character of protests: they are segregated, atomised, ideology-free and very rarely link up even with neighbouring activism. Indeed, many turn explicitly xenophobic when instead of a municipal target, immigrant shop-owners so often become the subject of community anger. Emanating from thousands of violent protests, especially since the late 1990s when urban neoliberalism took on its main features (Bond, 2002), there have been sporadic but nearly entirely unsuccessful attempts at organising up-scale. To, illustrate, recall the metropolitan Gauteng anti-neoliberal coalition known as the Anti-Privatisation Forum (APF). It was founded in 2000 after the University of the Witwatersrand Urban Futures conference, in part by radical students who – like Prishani Naidoo and Ahmed Veriava – were by 2015 lecturers involved in #FeesMustFall. But notwithstanding exceptional victories in specific sites – including Johannesburg metropolitan-scale service delivery policy – the APF had become moribund by 2012, in part due to organisational failure (McKinley, 2012).
The failure of communities to unify across space and social movements to unify across sector, added to the rise of the National Union of Metalworkers of South Africa (Numsa) as an independent radical force after denouncing the ANC Alliance in late 2013, led to formation of the United Front in 2014. By 2016, however, the Front had failed to find its footing notwithstanding (largely paper) membership of 400 radical social change organisations. Part of that problem was the inability of Numsa to generalise its ambitions to establish a strong independent left in civil society, which in part reflected internal debates about whether a new workers’ federation or even a workers’ party should take precedence. Partly, also, Numsa had financial problems after a R90 million shortfall on its income due to the expiry of some bargaining agreements. In any case, there were approaches to the student movement in late 2016 but the discussions and offers of assistance did not materially change conditions, probably because like most of society, even Numsa and the United Front were unprepared for the extraordinary upsurge in student protest. The other dilemma for students was that they had multiple political tendencies, and the Numsa/Front was just one of various competing projects – e.g. the Progressive Youth Alliance (with its SA Communist Party and ANC Youth League dominance), the Economic Freedom Fighters and PanAfricanist youth were much more visible ideologues. The splits in the student movement that resulted from competing tendencies have been partially documented, but the overall question remains: do students have the potential to again, cross class boundaries by uniting with low-paid workers; take physical space as semi-liberated sites to build that unity; and generate a national movement that takes on national targets, such as Treasury.
If so, that would allow several constituencies to find unity around political demands that could include fiscal policy. In February 2016, after all, Gordhan cut the real budget available in 2016-17 (and beyond) not only for social grants but for municipalities – including the R53 billion Equitable Share and R14 billion Municipal Infrastructure Grant that redistribute from centre to local (4%) – for water (12.4%) notwithstanding bulk and retail supply crises across the country, and for housing (12.5%). He cut the already tokenistic National Health Insurance scheme to the bone. In this context of austerity, an oppositional programme could rise, taking on Treasury, the SA Reserve Bank, and also the ratings agencies and financiers who apply such pressure, based on three arguments:
1) the SA state has the ability to raise sufficient funding to meet social needs;
2) the social spending component of the fiscus has been far too low; and
3) interest rates should be decreased, which would allow for more state borrowing (although exchange controls would need to be re-imposed to curtail capital flight) and also reduce South Africans’ extreme debt load, including that of recent graduates whose repayment rates are miserable.
First, state borrowing could be substantially raised. In the last comparison available (from Barclays Capital 2012), both South Africa’s total accumulated public debt and annual deficit are below that of most peer economies as well as being far below the wealthy countries’ debt levels. In historical terms, the South African public debt today is by no means at an excessive level.
Second, in comparative terms, South African social spending (as a share of GDP) typically ranks in the lowest five countries amongst the Organisation for Economic Cooperation and Development’s rankings of the 40 major economies, about half the rate that Brazil and Russia spend, for example, and a seventh as much as France (Bond, 2014a).
Third, interest rates are far too high, and as a result, debt repayment charges (for the state and students alike) are far beyond what they should be. Since the mid-1990s, when exchange controls were liberalised, the Reserve Bank has adopted a policy of imposing excessively high interest rates so as to attract foreign funds. The main way that the largest Northern governments (US, EU, Japan, UK) dealt with their own recent fiscal squeeze – especially as bank bailouts mounted into the trillions of dollars after 2008 – was printing currency (‘Quantitative Easing’). In contrast, the SA Reserve Bank aims to keep inflation in the 3-6% band using extremely high interest rates, which are entirely inappropriate given the economically depressed state of the economy. At the time of the student protests in October 2015, only Brazil, Russia, Turkey, Indonesia and Pakistan had higher interest rates (amongst those which can be measured by 10-year government bonds). The situation worsened, as several Reserve Bank rate increases were imposed in 2015-16.
However, if students and their allies in civil society advance the arguments made above, they will face both intellectual and policy resistance. First, there is the fatuous SA Reserve Bank (2015) claim that SA has an insufficiently low savings rate, which allegedly justifies high interest rates. Yet as noted above, there is plenty of loose savings available in South Africa, as witnessed by how much money sloshes around in the Johannesburg Stock Exchange and in real estate, which in both cases are at the very top range of the world’s most speculative markets, respectively (Bond, 2014a).The amount corporations hold in cash is said to approach R1 trillion, as they lack profitable investment outlets. Savings shortages are not a factor, in sum.
Neoliberals do have one valid rebuttal to the arguments above: if interest rates are lowered and social spending and state borrowing raised, there will be even worse capital flight. This is indeed a very serious problem, in terms of both illicit financial flows and licit, legal outflows of profits, dividends and interest (the ‘balance of payments’ within the current account). To pay these flows in hard currency, the Reserve Bank must borrow abroad, resulting in South Africa’s total foreign debt rising from $25 billion in 1994 to $140 billion by 2015 (the same share of GDP as PW Botha faced in 1985 when he defaulted), as distinguished from public domestic debt which is still manageable and can grow. In addition to illicit financial flows from South Africa (R330 billion annually from 2004-13), the licit outflows of profits, dividends and interest in 2015 exceeded R140 billion. (In comparison, the trade deficit was only R34 billion.)
The solution to these pressures is simple: re-imposition of exchange controls. This will be especially important in late 2016 when formal ‘junk bond’ status is likely to be imposed by the credit ratings agencies. Such capital controls worked in the period 1985-95 when the ‘finrand,’ helped to not only stop capital flight at a time the apartheid state was a victim of successful solidaristic protest in mid-1985 (when PW Botha’s ‘Rubicon Speech’ meant activists could further delegitimise South Africa). They are also a vital tool for national economic sovereignty in a world beset by extreme financial turbulence. As John Maynard Keynes (1933) once explained, “In my view the whole management of the domestic economy depends upon being free to have the appropriate interest rate without reference to the rates prevailing in the rest of the world. Capital controls is a corollary to this.”
Several other items in the mid-term budget that Nene had advocated were slightly adjusted by Gordhan in 2016, most notably the SA National Defense Force which is taking a R8 billion reduction in coming years. But there could be further cuts, for if South Africa were to become a more peaceful society as a result of higher social spending and lower interest rates (payment of interest will cost the state R148 billion in 2016-17), two items could be reduced quickly. Security cluster spending – R182 billion in 2016-17 – is lower than Nene had offered, in spite of the state allocating itself R3.3 billion extra in 2015 for personnel and armaments against civilians (e.g., students), including high-pitch sonic sound cannons (Mabuza and Hosken, 2015).
The police epidemic of self-destructive, extreme brutality suggests weapons should be holstered, not amplified. However, the 2016 Budget Statement by State Security Minister David Mahlobo (2016) was ominous, suggesting a rising degree of paranoia: “The forces that are opposed to us are hard at work… Some of these protesters are undermining the authority of the state by engaging in acts that seek to provoke the law enforcement agencies hence some people have acted with impunity by killing members of the security agencies.” Mahlobo (2016) cited NGOs which “work to destabilise the state… They are just security agents that are being used for covert operations.” They have “very funny names” and fund the student movement, like others that “are hard at work in certain parts of our globe using various role players to promote their agenda whilst undermining national security of various countries.”
In addition, as noted, the Treasury’s category “economic infrastructure” includes many ill-considered projects. Aside from the carbon-intensive PICC projects already discussed, the biggest current infrastructure bill is for Eskom’s coal-fired power plants, backed by a World Bank $3.75 billion loan (its largest ever, but one whose repayment should be deeply discounted thanks to lack of Bank due diligence). Recall that Eskom chair Valli Moosa improperly allowed the ANC’s Chancellor House to front for Hitachi on a R60 billion tender that drove the price up by many more tens of billions, as 7000 welds needed to be redone at Medupi, which fell seven years behind construction schedule (Hunter 2015). And much larger white elephants loom on the horizon: the R300 billion share Pretoria has committed to capitalising a BRICS bank for corporate infrastructure (Bond, 2016) and the trillion rand estimated for eight nuclear reactors (Faull 2015). Such subsidies to the rich and powerful by corrupt politicians are often openly admitted, for as Zuma himself put it rather unguardedly in October 2015, “I always say to business people that if you invest in the ANC, you are wise. If you don’t invest in the ANC, your business is in danger… This organisation does not make profit, but we create a conducive environment to those who make profit” (Letsoalo and Hunter, 2015).
The essence of politics in South Africa is alliance building, and students who mobilised for a 0% fees increase in 2016 plus insourcing of outsourced workers did a remarkable job in their initial efforts to move across class, to move across space and to move cross scale. Much of the obvious political challenge to power in the 2015-16 protests related to race, decolonisation and restructuring of university power. A few nominal changes were made, and major demands are still outstanding in relation to curriculum reform, shifting the race and gender make-up of the professoriate, and ending the alienation of black, female and LGBTI students.
However, this chapter has merely addressed the most serious outstanding challenge: achieving free tertiary education by identifying processes associated with the students’ adverse class power, financial institutions’ ‘state capture’, fiscal options (including the generationally-vital opportunity costs and benefits of defunding fossil-fuel mega-projects in favour of human capital investment), and the politics therein. This review of the political economy of the students’ major demand has concluded that to win free education, worker insourcing, and genuinely decolonised universities, the students will inexorably demand that #NeoliberalismMustFall and that #FossilFuelsMustFall. And if this transcends #FeesMustFall and #ZumaMustFall, the fallists will then be joining a major process underway across the world: the ‘double movement’ to the Polanyian project of resisting marketisation of society. If Karl Polanyi’s (1944) thesis can be updated to account for potential ecological catastrophe (Burawoy 2014), then this student generation will logically link their demands for more university spending to the critique of carbon-intensive infrastructure spending advanced above.
It is true, Naomi Klein (2014) argues, that ‘This [climate] changes everything.’ Recall, finally, the October 2015 mobilisation of social support across South Africa that contributed to the exceptional pressure mounted against the Zuma government – more than the countervailing pressure of neoliberals in Treasury and the ratings agencies, at least for R2.3 billion’s sake. If the argument above is sound, there is every potential for students and their community, youth, labour, feminist and environmental allies to find routes forward to a new society, by building on society’s legitimate grievances and demanding the ecological and socio-economic benefits that would follow an end to both the influence of the neoliberal bloc represented by Gordhan, and the populist patronage of Zuma’s last allies. As that battle continues to unfold – as it will for years to come – an intensified progressive alternative stands ready to claim, and to win.
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