The Real History and Contemporary Character of Black Economic Empowerment (Part 2)

By Dale T. McKinley · 10 Feb 2011

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Editor's Note: Find "Part One" here.

The ascension to and capturing of, political power always has a way of (eventually) exposing the practical underbelly of the victor’s ideological dressage. And so it was with the ANC’s transformation from liberation movement to political party in the early-mid 1990s.

Flush with their ‘overwhelming mandate from the people’ in the 1994 election, the ANC leadership quickly abandoned any possibility of a radically redistributive socio-economic developmental path that would (as had been proffered so many times in the past) begin a process of economically empowering the vast majority of South Africans who were both black and poor. The quick-step from growth through redistribution (as encapsulated in the RDP) to redistribution through growth (GEAR) was brutally decisive and wholly consistent with the historic development of BEE as understood by an ANC leadership now with institutionalised political power.

The open embrace, both institutionally and ideologically, of a capitalist political economy – grounded in apartheid socio-economic relations – practically meant that there were only two possible ways of going about building and expanding the black (‘patriotic’) bourgeoisie that would constitute the foundation (indeed, the essence) of both a post-apartheid BEE and developmental path:

- By encouraging and/or pressurising white corporate capital to facilitate such BEE through selling (non-core) businesses to existing and emerging black ‘investors’, who in turn, would be assisted by (white controlled) financial institutions through ‘special purpose vehicles’;

- By utilising the institutional and capital resources of the state to facilitate such BEE, mainly through the privatisation/corporatisation of state assets, awarding of government tenders, the provision of seed capital and the threat of effective expropriation (not nationalisation) through the unilateral imposition of quotas of black ownership in key sectors of the economy. This would then be combined with a separate ‘wing’ of ‘broad based’ BEE that would target the empowerment of the black majority through increased capital expenditure, enhanced support for SMME’s and facilitation of skills training and institutional capacitation.

For the first several years of ANC rule, the first ‘way’ was dominant. A rash of ‘empowerment’ deals between emergent/wannabe black capitalists (most often all with close political connections to the ruling ANC) and white corporate/finance capital took place. Best known amongst these was NAIL (Metlife, African Merchant Bank, Theta) and the NEC (Anglo’s Johnnic). Literally overnight, South Africa had ‘created’ new black millionaires who publicly paraded their new found riches and loudly claimed that this was the start of a new dawn in which all black South Africans could share (for example, Cyril Ramaphosa and his ‘people’s’ Ikageng Shares). ANC politicians lauded South Africa’s equivalent of the ‘American dream’ and loudly endorsed the morality of blacks getting ‘filthy rich’. However, when the Johannesburg Stock Exchange imploded in 1997-98, the dominant straw-man edifice of this BEE strategy came crashing down as well. What made the exposure so politically damaging were two powerful (yet radically distinct) charges against the ANC government that had been its chief champion.

From the side of the wounded black bourgeoisie came the charge that their government had not nurtured and protected them (raising parallels with the ways in which the apartheid state had done for white/Afrikaner capital) from hostile economic conditions both domestically and internationally. This was coupled to the charge that the ANC state’s neoliberal macro-economic policy framework was inherently antagonistic to the sustenance of an emergent black capitalist class since its core policies were effectively facilitating the interests of domestic (white) and international corporate capital rather than ‘its own’.

From the side of the majority of black workers and poor - as well as from sections of the ANC’s alliance partners, COSATU and the SACP - came the charge that the ANC government’s neoliberal policies, with BEE at the centre, were responsible for massive job losses, increasing impoverishment and inequality, a lack of basic services and most damaging of all, a betrayal of the redistributive principles and vision of socio-economic equality of the liberation struggle. Here, it was the creation and privileging of a small and politically connected black elite at the expense of the vast majority of poor black people that represented ample confirmation.

Both private capital and the ANC scrambled to ‘repair the damage’, or at least be seen to be doing so. The second ‘way’ approach took over. By the early 2000s, a range of new empowerment deals, equity programmes, social awareness plans and longer-term ‘empowerment’ scenario planning had been put in place/publicly unveiled by white corporate capital who were clearly trying to pre-empt what they feared might well be a class and racial backlash. For its part, the ANC state embarked on a strategic approach that sought to ‘mainstream’ BEE as part of an expanding ‘developmental’ state dedicated to the social and economic upliftment of the black majority. While it was stated, once again, that this would be achieved through creating a ‘national consensus’ that recognised, but cut across racial and class lines, the reality was that such a strategy was nothing more than the logical extension of the historic corporatist logic of the ANC leadership; in other words, cutting up the capitalist pie more evenly without ‘revolutionary’ disruptions to South Africa’s political economy. As usual though, there was no acknowledgment that the real issue is who is cutting up the pie and which ‘pieces’ are being eaten by whom.

Then President Mbeki’s two-nation thesis provided the necessary analytical/explanatory rationale (utilising the implicit threat of social disorder) and the ‘turn’ to a stated commitment to adopt a kinder/more human faced capitalism (social democracy) in the face of continued poverty and global inequality provided the necessary political rationale. Soon there emerged a range of new initiatives (such as the BEE Commission) and legislation that would ‘guide’ BEE through a more systematic programme of targeted ‘empowerment’ deals and integration into the state’s capital expenditure outlays to ostensibly benefit the poor. Despite these manoeuvrings and more recent politically motivated forms of BEE initiatives, most black South Africans remain deeply sceptical and generally hostile to the way in which BEE has been, and continues to be, pursued.

As a result, the ANC implicitly understands that it will not suffice simply to re-arrange the BEE deck chairs but that it is, more than ever, necessary to make a re-connection with the real basis of the ANC’s continued legitimacy (i.e., the liberation struggle) in order for BEE not to be rejected by the majority of its own professed constituency.  So, in order for what, in reality, continues to be a specific programme of class accumulation and privilege to be ‘seen’ and accepted as part and parcel of the historic mandate of the ANC (i.e., the economic emancipation of the workers and poor) there is the continued need to provide ideological ‘cover’. As in the past, the ‘national democratic revolution’ (NDR) is the associated talisman.

Besides its more widespread ‘deployment’ as the generic underpinning of South Africa’s ‘transitional’ political economy - for example, in the service of the SACP and COSATU’s continued alliance with the ANC – what we now have is a concerted attempt by the ANC to resurrect the practical applicability of NDR theory as the macro-framework for pursuing BEE and rationalising all its other associated and contradictory ‘developmental’ policies and activities. In this respect, its crucial function is to provide justification for the existence and expansion of a (‘patriotic’) black bourgeoisie – which practically represents the leading ‘motive force’ - alongside continued and close cooperation with white capital.

The result is that contemporary BEE in South Africa has become, more than ever, the prime practical vehicle for elite accumulation, rent seeking and corruption as well as the conceptual cover for extreme inequality. 

Dr. McKinley is an independent writer, researcher and lecturer as well as political activist.

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