A Recipe for Disaster in South Africa: Anti-Capitalist Ideology, Corruption, and Criminality

R W Johnson has an informative article on “Why Violence and Looting Have Exploded Across South Africa” published in the Quilette. Some of the low-lights:

“Shopping without money”

“[O]nce the rioting and looting of shops and hijacking of trucks on the highway began, with the police clearly scared and ineffective, word rapidly spread that you could go “shopping without money,” creating huge excitement among the ranks of the millions of poor and unemployed Zulus who inhabit the townships and squatter camps around Durban and Pietermaritzburg, and from there spreading into every small town of the province. Most of the looters and miscreants were unconcerned about Zuma’s fate. They simply heard along the grapevine that trouble was going on and realised that opportunity was staring them in the face.”

Poverty increases under ANC rule

When the ANC was first elected in 1994 its posters promised “Jobs, jobs, jobs!” but paid little heed to that once they were elected. In 1995 the average number of unemployed, according to official figures, was 1,698,000 or, if one took the expanded definition of unemployment, including those who had given up looking for a job, the figure was 3,321,000. With only a few exceptional periods to the contrary, that figure has grown steadily and hugely to surpass 11.4 million today. Since the unemployed have little or no income, this has also meant a huge growth in both poverty and inequality. The ANC has routinely deplored poverty and inequality but it has generally tried to pretend that this is part of the “apartheid inheritance.” As the figures show, this is the opposite of the truth.

Political cronyism under the banner of “equality”

The article also points to one of the key causes of South Africa’s decline: a political class of government workers, trade union officials, and BEE “capitalists” politically connected to government officials:

“In practice the plight of the unemployed and poor has been ignored. The government is far more concerned with the “haves” within its coalition—the BEE (Black Economic Empowerment) capitalists, the public sector workers and the trade union bosses. The government’s offer of an extra R18 billion ($1.25 billion) for already well-paid public service workers came only days before the unrest and was, effectively, an insult and a provocation for the unemployed. Similarly, Ramaphosa attempted to garner public sympathy for the “plight” of MPs—who are among the one percent best paid people in the country.”

“Most striking of all, however, is the BEE legislation which has, not surprisingly, been nominated by foreign investors as the biggest single drawback to investing in South Africa. It is, after all, effectively a tax on investmentif you want to invest in South Africa you have to more or less give away a large chunk of your equity to BEE partners who have nothing to offer by way of skills or capital other than an ability to get government ministers to take their calls. This is straightforward crony capitalism. The effect of such legislation is to push foreign investment away—at the cost of many jobs—simply in order to line the pockets of a handful of ANC-connected cronies.”

Such cronyism is not capitalism, but political cronyism.

Capitalism is a political-economic system based on the principle of individual rights, which means the separation of state and economics (just like the separation of church and state).

Under capitalism, the government’s sole purpose is to protect each individual’s rights equally. It is a system of justice. Cronyism is the practice of giving rewards based on considerations other than merit: it is a form of injustice.

A “partner” who has “nothing to offer by way of skills or capital other than an ability to get government ministers to take their calls” would not exist under capitalism, as under a free-market (the chief trait of a capitalist economy) one does not require the permission of government officials to start a business. One-acts by inalienable right.

Given the two concepts — the political cronyism of statism vs. the political freedom of capitalism — are incommensurable, what does the invalid lumping of the two as “crony capitalism” seek to accomplish? It seeks to blame capitalism for the sins of politicians and their cronies who would not survive in a free market.

Capitalism creates; statism destroys:

The result has been the destruction of large segments of South Africa’s infrastructure:

“[A]mong the mass of looters are more sinister elements. Criminals naturally flourish in such an environment, either organizing massive heists of goods or using the mayhem as cover for other crimes. But there are also clearly political elements trying to make the country ungovernable by attacking key pieces of infrastructure—there have been attacks on reservoirs, over 120 attacks on electricity sub-stations, and the road leading to the Sapref refinery in Durban (which produces one third of all South Africa’s petrol) has become so dangerous due to continuous attacks on vehicles that the refinery has had to close down completely. Already there are huge queues at garages and a major fuel crisis is building. Moreover, as soon as a shop, warehouse, or factory has been looted it is set on fire. None of these crimes produce money and the destruction of such buildings is bound to cost jobs and lead to many more people going hungry in future.”

Such infrastructure has taken decades upon decades to build, has been destroyed in a matter of days.

Why Violence and Looting Have Exploded Across South Africa is an important read.