Chapter 10                                          

 

 

                                             Power and Principle in South Africa

 

                        “Chaps, we have to choose.  We either keep nationalization, and

                        get no investment, or we modify our own attitude and get investment.”

                                                                                                –Nelson Mandela, 1992[1]

 

 

            When put on trial for treason in 1959 by South Africa’s white supremacist government, Mandela described himself as attracted by socialism, but not a Communist, and not (at that time) committed to violence.  He testified under oath:

 

Mandela: My own view is that it is not necessary in this country to employ force and violence in order to bring about either the demands set out in the Freedom Charter, or even to bring about socialism. . . .

Prosecutor: Do you think it’s possible to achieve a transformation to a communist state in this country peacefully?

Mandela: You keep talking about a communist state; I talk about a socialist state. . . .[2]

 

            The Freedom Charter, to which Mandela alluded in his testimony, was adopted in 1955 as the common program of the party to which Mandela belonged, the African National Congress (ANC) and other groups allied with it in the struggle against apartheid.  Apartheid was a system of strict racial segregation, which denied people of color practically all rights.  It was gradually implanted in South Africa after the National Party, dominated by Afrikaner descendants of Dutch Boer settlers, won the elections of 1948.

 

            In 1956, three years before he was tried for treason, Mandela, writing in the left wing South African magazine Liberation, had denied that the Freedom Charter was, strictly speaking, socialist.  Mandela wrote:

 

Whilst the Charter proclaims changes of a far-reaching nature, it is by no means a blueprint for a socialist state but a programme for the unification of various classes and groupings amongst the people on a democratic basis.  Under socialism the workers hold state power.  They and the peasants own the means of production, the land, the factories, and the mills.  All production is for use and not for profit.  The Charter does not contemplate such profound economic and political changes.   Its declaration “The People Shall Govern” visualizes the transfer of power not to any single social class, but to all the people of the country, be they workers, peasants, professional men or petty-bourgeoisie. . . (Mandela quoted in Meredith 1998: 138-39).      

 

            Mandela could hardly deny, however, that if the Freedom Charter did not call for socialism in a narrow sense of the term, it did call for social democracy in a wide sense of the term.  Some of its clauses were as follows:

 

THE PEOPLE SHALL SHARE IN THE COUNTRY’S WEALTH!

 

The national wealth of our country, the heritage of all South Africans, shall be restored to the people;

The mineral wealth beneath the soil, the banks, and monopoly industry shall be transferred to the ownership of the people as a whole;

All other industry and trade shall be controlled to assist the well-being of the people;

All people shall have equal rights to trade where they choose, to manufacture, and to enter all trades, crafts and professions.

 

THE LAND SHALL BE SHARED AMONG THOSE WHO WORK IT!

 

Restriction of land ownership on a racial basis shall be ended, and all the land redivided amongst those who work it, to banish famine and land hunger;

The State shall help the peasants with implements, seed, tractors, and dams to save the soil and assist the tillers;

Freedom of movement shall be guaranteed to all who work on the land;

All shall have the right to occupy land wherever they choose;

People shall not be robbed of their cattle, and forced labour and farm prisons shall be abolished.

 

THERE SHALL BE WORK AND SECURITY!

 

All who work shall be free to form trade unions, to elect their officers, and to make wage agreements with their employers;

The State shall recognize the right and duty of all to work, and to draw full unemployment benefits;

Men and women of all races shall receive equal pay for equal work;

There shall be a forty hour working week, a national minimum wage, paid annual leave,  and sick leave for all workers, and maternity leave on full pay for all working mothers;

Miners, domestic workers, farm workers and civil servants shall have the same rights as all others who work;

Child labour, compound labor, the tot system and contract labour shall be abolished.

 

THERE SHALL BE HOUSES, SECURITY AND COMFORT!

 

All people shall have the right to live where they choose, to be decently housed, and to bring up their families in comfort and security;

Unused housing space shall be made available to the people;

Rent and prices shall be lowered, food plentiful, and no one shall go hungry;

A preventive health scheme shall be run by the State;

Free medical care and hospitalization shall be provided for all, with special care for mothers and young children. . . .[3]

The Freedom Charter concluded: “Let all who love their people and their country now say, as we say here: THESE FREEDOMS WE WILL FIGHT FOR, SIDE BY SIDE, THROUGHOUT OUR LIVES, UNTIL WE HAVE WON OUR LIBERTY.”

 

            When Nelson Mandela emerged from twenty-seven years in prison, in February of 1990, he immediately assured the African National Congress, in his first speech, which he addressed to the multitudes who welcomed him in downtown Cape Town, that he was still a loyal party member; his program was still the ANC program as it had been declared in the Freedom Charter of 1955.  The changing of Mandela’s mind, to the point at which he could say in 1992 that he and his ANC colleagues should “modify our own attitude and get investment,” was rapid.  According to his authorized biographer, Anthony Sampson, Nelson Mandela changed his mind on nationalization in February of 1992, two years after his release from prison, and approximately two years before he was elected President of the Republic of South Africa (Sampson 1999: 427-28).  Before discussing the immediate occasion of Mandela’s change of mind, three points should be made about the historical context at that time.

            First, to a considerable extent, by 1992, South African industry had already been nationalized or placed under government control by the Afrikaners of the National Party.  Prior to 1948, the Anglos had dominated the economy.  The National Party made the public sector mainly an Afrikaner preserve, and enlarged the public sector.  It was widely assumed that blacks in power would do what the Afrikaners in power had done, i.e., promote their ethnic interests by strengthening their own role in the state and strengthening the state’s role in the economy (Price 1991: 287).[4]  

            Second, the ANC had only limited success fighting apartheid with electoral politics, with challenges to apartheid in the courts, with mass demonstrations, with strikes.  It failed with nonviolence and it failed with violence until--if we may be allowed to exaggerate to make the point--investment in South Africa faltered.  When investment faltered, the previously apparently invincible white supremacist police state began to dissolve.  Investments faltered partly because of sanctions (boycotts and the like) and partly because investors lost confidence.  (One reason why the statement that prior efforts of the ANC got nowhere is an exaggeration is that those prior efforts helped to bring about the imposition of sanctions and the loss of investor confidence.  Another reason is that the ANC’s emphasis on nonviolence for many years, combined with its long history of willingness to work with anti-apartheid whites, contributed to the moral atmosphere that eventually made a peaceful transition possible.)  Influential members of the business community pinned their hopes on a Mandela-led ANC government as a political solution to the country’s social problems—a solution that would reverse, not accelerate, the trends that had made South Africa unattractive to investors. 

            Third, Anthony Sampson writes that when Mandela was released from prison:

 

. . . [he] still believed in a classless society, while “painfully aware” of the opposite trend.  He looked for ways to reduce inequality.  In September 1991 he told businessmen that only nationalization could redress the imbalances, though he would welcome an alternative.  The confusing signals reflected arguments within the ANC which were more extreme than those that had raged through the socialist parties of Europe; for South Africa had long been an extreme case, both of inequality and of dependence on international capital (1999: 428).

Thus the problem Mandela faced was--in addition to, and intertwined with, the problems of building a non-racial and non-sexist society--the problem of how to build a classless society in a country whose economy was highly dependent on foreign investment capital. 

            The immediate occasion of Mandela’s change of mind was a meeting of the World Economic Forum held at Davos, Switzerland, in February of 1992.   About the sponsoring organization Richard Falk has written, “Without any formal authorization, the World Economic Council at Davos that brings together mega-capitalists on an annual basis has virtually displaced the United Nations as a source of guidance on global issues”  (Falk in Camilleri 2000: xii).  As a probable future President of the Republic of South Africa, a man who had just a few years previously been breaking rocks on Robben Island under the blinding sun and under the watchful eyes of sometimes sadistic Boer guards had been invited to Davos.  Sampson recounts the occasion of Mandela’s changing his mind:

He was lionized by the world’s bankers and industrialists at lunches and dinners.  He argued with them that other industrial countries, including Britain, Germany, and Japan, had needed nationalized industries to restore their economies after world wars.  “We are going through a traumatic experience of war against the people,” he explained, “and therefore we need nationalization.”  . . . .  He was finally turned by three sympathetic delegates from the left.   The Dutch Minister of Industry was sisterly and understanding, but smashed his argument.  “Look, that’s what we understood then,” she explained, “but now the economies of the world are interdependent.   The process of globalization is taking root.  No economy can develop separately from the economies of other countries.”   Leaders from two Asian socialist countries--China and Vietnam--told him how they had accepted private enterprise, particularly after the Soviet Union collapsed.  “They changed my views altogether,” recalled Mandela.  “I came home to say, ‘Chaps, we have to choose.  We either keep nationalization and get no investment, or we modify our own attitude and get investment’” (1999: 429).

 

            The story might have continued from here in several different ways.  It might have been that after Mandela, the revolutionary guerrilla leader released from prison, had sold his revolutionary soul, the devil dutifully kept his part of the bargain by delivering major foreign direct investment to South Africa.  Or, it might have happened that after Mandela had proved himself not to be what Margaret Thatcher feared he might be, “just another half-baked Marxist” (Ibid.: 412) he proved himself to be instead a realistic economist, or at least a statesman who knew enough to appoint realistic economists to advise him, and the result of the realism and the economics might have been creeks and rivers of capital flowing into South Africa.

            What actually happened was less dramatic and more painful.  South Africa under the ANC adopted grow-and-share policies similar to those of other left-leaning democracies.  First they were called Reconstruction and Development, and then later Growth, Employment and Redistribution, GEAR for short.  Economic growth was supposed to create jobs and build the tax revenue base.  Growth and shifts in priorities were supposed to pay for massive low cost housing construction, better schools, more health care, and the like.  To make the growth happen, a campaign was launched to entice more foreign capital to come to South Africa.  Some progress was made, but on the whole the results were disappointing:

The target of a million new houses in five years could not be reached, and the promises of more jobs proved hollow....  Mandela faced some disillusion.  He had seen how foreign businessmen had piled into the apartheid boom in the sixties while he was in jail, when labor was cheap and the price of gold was shooting up.  Now gold was slumping and labor was more expensive, and Africa was shunned by investors, who were racing into the miracle economies of Southeast Asia.  He tried to attract investors by reducing exchange controls, preparing to privatize and confronting the unions; but in the end they put their money elsewhere anyway (Sampson 1999: 507).

 

The ANC was thus left in the position of people who sacrifice long-held principles to please their  lovers, only to find that in spite of their moral sacrifices, and in spite of their  efforts to make themselves  attractive, their lovers prefer others, do not come, and do not stay. 

            In 1998, after nearly four years of Mandela’s presidency, a South African businessman named Anthony Ginsberg wrote a book entitled South Africa’s Future in which he argued that major changes were needed.  Something had to be done.  The population was growing, while the economy was shrinking.  Of people leaving school and entering the job market, only one in 14  (7 percent) was able to find a job.  Fifty percent of blacks ages 18 to 35 were unemployed.   Seventy percent of South Africans, including ten percent of whites and the great majority of blacks, lived in conditions classified as poor.  Inequality was extreme: 53 percent of total consumption of goods and services was enjoyed by ten percent of the population, while the bottom forty percent of the population accounted for only ten percent of consumption.  Gross Domestic Product per capita, adjusted for inflation, fell from 8,380 rands in 1995, to 7700 in 1996, to 7192 in 1997, to 6932 in 1998.  According to Ginsberg, there was “a need to generate 425,000 new jobs per year, in order to just absorb the annual number of new entrants into the labour market, let alone make any dent in the unemployment statistics.  In 1997 and 1998  [the South African] formal sector contracted by an average of 100,000 jobs”  (1998: 10).

            Something had to be done.  With nearly half the young population forced to subsist without jobs, crime rates soared.  Johannesburg set global records for crime, with more murders and rapes per capita than any other city in the world.  South Africa as a whole had a murder rate seven times that of the United States and ten times the world average.  Ginsberg describes the desperation of the situation in 1998:

Millions of innocent South Africans now effectively live jailed inside their houses, surrounded by their own barbed-wire fences and walls.  Meanwhile, criminals rule the streets.  How healthy is such a society to be bringing up our children in?  . . . .  The continued increase in crime has led to a renewed wave of emigration out of South Africa, made up primarily of those with the skills necessary to be able to secure good employment prospects abroad.  As The Star newspaper has said, whether your name is Domingo, De Beer, or Dlamini the fact is that you could be the next victim of rape, torture or hijacking, or just as likely, murder (1998: 39, 41).

 

            Ginsberg does not blame President Mandela for any of this.  He portrays Mandela as the true father of the nation, who brokered a peaceful transition in a situation that might have led to a tragic civil war.  He blames the economic and social policies of the preceding white supremacist governments as much or more than he blames the ANC.  Nevertheless, he insists that something must be done.  Soon.

            Something must be done.  But what?  The Future of South Africa tells the reader exactly what.  Ginsberg is not plagued by self-doubt.  Nor is he a lone voice in the wilderness.  He purports to know what “tough decisions” need to be made and to echo the voices of rational and well-informed leaders of the private sector, of academia, and of enlightened segments of the public sector.  Although he makes a large number of proposals, each of which deserves to be considered separately on its own merits, the centerpiece and main thrust of his argument is plain and  clear: Attract more foreign investment! 

            Ginsberg recognizes that the South African government is already trying to attract foreign investment, but he believes it is not trying hard enough.  To be sure, South Africa has established permanent trade missions dedicated to wooing capitalists in the principal places where capitalists are found, including the United States.  But there is no permanent South African trade mission in California.  How can South Africa be serious about attracting investment, Ginsberg asks, if it  has no trade mission in California, or in any of the ten western states of the United States?  To be sure, there are government agencies charged with trying to find investors and bring them to South Africa.  But there is no cabinet-level ministry devoted to bringing in foreign capital.   Ginsberg gives a list of thirty countries that now have cabinet-level ministries for promoting investment.  When will South Africa wake up, smell the coffee, and get in step with its competitors?   To be sure, South Africa is offering tax breaks to investors and exporters.  But what South Africa needs is a thorough overhaul of its taxation policies and a new tax system, one that will shift the bulk of the burden of taxation from investors to consumers.  To be sure, the government has curbed labor union demands.  But when will South Africa realize that workers are better off with jobs than unemployed, even if the jobs are at low wage rates?  There are more than 300 Export Processing Zones (EPZs) around the world where multinationals can run manufacturing operations while paying no duties and no taxes at all to the host governments.  When will South Africa get on board and create EPZs? (Ginsberg 1998: 137-220).

            The outlook for social democracy appears to be bleak.  When Nelson Mandela reluctantly gave up nationalization, he intended to keep his ideals and to pursue them by other means.  In the light of the logic of global competition that proved to be inherent in the pursuit of investment capital, it appears that essential parts of Mandela’s ideals must be abandoned or indefinitely postponed.  Whether any alternative to a neo-liberal agenda like the one Ginsberg advocates is viable depends on whether there are any chinks in its logical armor.  It depends on whether Ginsberg is talking about reality or “reality.”  Ginsberg’s case that his foreign-investment-driven plan for South Africa is a (and the only) solution to the nation’s problems rests on two kinds of arguments, which can be called empirical arguments and rational model arguments.

            His empirical arguments are, in brief: There is no need for South Africa to reinvent the wheel.  The solution to its problems is known.  It can be learned by studying the experiences of countries that have already solved their problems by successfully attracting international investment.  Ginsberg cites Costa Rica, the Ivory Coast, the Dominican Republic, Malaysia, Malta, Mauritius, the Philippines, Mexico, China, Thailand, Singapore, Chile, Brazil, and the Czech Republic as empirical proof of his theses.  He even cites Russia as a bright example of a country that has privatized industry faster than South Africa (although he also cites Russia as a bad example of a country unable to collect taxes, and as a bad example, like Colombia and South Africa, of a country where crime is out of control) (1998: 43, 63-64, 153, 164-82).

            Although South Africa’s Future was published only a few years ago, already some of the stars in Ginsberg’s firmament have dimmed.   The notion that foreign-investment-led development was moving society in the direction of solving deep problems of poverty and inequality has lost credibility, even among those who might formerly have given it credence.  International capital is a fickle lover; or, to change the metaphor, the flow of money around the globe does not crest and fall regularly as the tides rise and ebb under the regular influence of our moon’s gravity; rather it lurches unpredictably from shore to shore under the influence of unknown moons economists pretend to understand but which astronomers have never detected, whose gravitational pulls are as erratic as they are powerful.  Yet the decline of some of yesteryear’s high growth economies once temporarily favored by international capital is not the only or even the most important objection to Ginsberg’s evidence. 

            A more important argument is that a tax haven, even in its bright heyday, is never empirical evidence that counts in favor of the thesis to be proved.  The thesis is that South Africa, or any country, can do what tax havens do and get the results they get.  Tax havens, however (and similar environments that make themselves “business friendly” by weakening government and labor), are, by definition, places that acquire an advantage by offering lower taxes than their competitors in the race to attract capital.   “Lower than” implies that some countries have to have higher taxes to preserve the differential that gives the tax haven its advantage.  To say that every country could be a tax haven if only it would wise up and understand economics, is like saying that better coaching could improve the present dismal record of the world’s basketball teams, which, on average, lose 50 percent of their games.   Countries that succeed in becoming magnets for capital provide evidence for the proposition that incentives for business attract business.   They do not provide evidence for the proposition that if every country followed suit, all countries would prosper.

            So much for the empirical evidence.  What we will call rational model arguments, i.e., arguments based on the inherent logic of the market rather than on empirical case studies,  provide stronger support for neo-liberalism.  The rational model arguments are compatible with the neo-liberal admitting that there is no guarantee that any given nation will win in the intensely competitive race for investment capital--but saying that nevertheless, every well-advised nation will play the game as best it can, because there is no other game to play.  Ginsberg writes:

In many ways, international capital markets have more power to affect our economy and the future policies we will need to adopt, than anything our own policy-makers may be dreaming up.  We have to understand the way markets work –what drives them up or down.  The world has changed and we must appease our new masters if all our citizens are to enjoy an improved quality of life.  Every day the capital markets are deciding which countries of the world are worth investing in, and which are ready for the trash heap, or have a long way to go before they, the markets, will reward such countries with a signal to buy.  Today the bond markets of London, New York, and Tokyo decide whether South Africa or Argentina is the country to invest in.  We cannot afford to thumb our nose at these powerful market forces (138).

 

              We recognize that advocates of neo-liberal solutions have a right to speak for themselves.  Nonetheless, we will now formulate for them eight of what we believe to be their implicit premises, using the case of South Africa as an example.  Of course, anyone who disagrees or feels misrepresented is free to reply.

 

Premise 1.  The only way to overcome poverty is for poor people to get money with which to buy housing, food, medical care, and other necessities and conveniences.

 

Premise 2.  The only way (at least the only desirable way) for a poor person to get money is for that person to find a job.

 

Premise 3.  Jobs come into existence only when investors create jobs.

 

Premise 4.  All human beings, including investors, seek to maximize the satisfaction of their preferences.

 

Premise 5.  In the case of investors, Premise 4 mainly means maximizing some combination of high earnings and low risks (greater risks being acceptable when the expected earnings are higher).

 

Premise 6.  South Africa does not have enough domestic capital to create jobs fast enough to absorb unemployment and keep pace with the growth of the population.

 

Premise 7.  Therefore, to overcome poverty, South Africa must seek foreign capital.

 

Premise 8.  Following from Premise 5, foreign investors will invest only on terms they accept, and these will be terms that maximize their confidence that they will achieve their investment objectives.

 

Conclusion.  Consequently, to overcome poverty, South Africa must remold itself in order to become--insofar as it possibly can become--an environment where potential investors will feel confident that they will achieve high rates of return and/or run low risks.

 

            If all eight premises and the conclusion following from them are true, then neo-liberals like Ginsberg correctly state some things that must be done (whatever else is done).  Their plans for remolding South Africa may not be optimal, and in particular they may have no convincing reasons for their belief that growing wealth in the country will trickle down to the poor.  Nevertheless, if the above premises are true, there is no alternative to the main thrust of what they propose.  Consequently, if there is an alternative, it must be because one or more of the premises stated above is not true.

            Our opinion is that all eight premises are false, and that the conclusion (9) is therefore also false.  Although not everyone will share this opinion, most people will probably find one or more of the eight premises to be at least dubious.    The reason why such ideas are taken for granted is that they float in the vague fuzzy background of neo-liberal discourse, not stated and therefore not examined.

            In particular, Premise 4, which amounts to saying that all people are selfish, is not true.   It can be made true by definition in abstract economic theory, but it is not true in any substantive sense.  Mohandas K. Gandhi and Mother Teresa are extreme counterexamples, but they are not unique.  Nelson Mandela has not lived for personal gain, but to serve the public good, and so have thousands of his comrades.  Gandhi, Teresa, and Mandela, and the millions who have been inspired to emulate them and others like them, are not legends.  They are flesh and blood, anatomically identical to the rest of the species.  The very large class of unselfish people includes many who are called Christians or Muslims or Jews or Buddhists, many who are called socialists, many who are called mother or father, and many more who go by other names, including some who go by the names “capitalist,” and  “investor.”   It includes a fifth column of advocates for justice found even on Wall Street and even on the campuses of expensive private liberal arts colleges.  It is partly because of the fifth column’s work for socially responsible investment policies that the ANC partisans on the front lines were able to bring down apartheid.   Today, there are idealists interested in promoting the common good of the world’s peoples, who are working to bring global capital flows under the control of a democratic system of world governance.  Psychological studies show that most normal adults want to be good, and that there is a natural developmental progression toward principled behavior.[5]   Omitting unselfish behavior from economic theory is a scientific error.  Overlooking the need to nurture and encourage unselfish behavior is a policy error.

            Given that one or more of the premises from which neo-liberal prescriptions can be deduced is false, it follows that there might be an alternative.  It also follows that whatever alternatives there are must be ones that contradict one or more of the premises from which neo-liberal conclusions ineluctably follow.  It remains to move on from saying that it is not necessarily true that there is no alternative, to saying that there are alternatives. 

            From an empirically existing alternative, the work of organizations in the nonprofit and cooperative sectors, we will draw some principles for an alternative rational model.   In making our description concrete by referring to an institution that actually exists, we will necessarily refer to an institution with blemishes, and our example, Habitat for Humanity, is meant to be an example of a self-critical organization struggling with its own limitations, as well as an example showing principles common to many nonprofit organizations, which, if extended, would make possible the realization of the goals of the Freedom Charter.

            One of the issues Habitat struggles with is the tension between the ethic of giving, which is demanded by the ancient scriptures that define its normative framework, and the modern world where cooperation and sharing are organized (imperfectly, one might politely say) by money.   This tension appears in the following words published in Habitat’s international magazine:

 

Habitat for Humanity affiliates walk a fine line between ministry and accountability when it comes to the issue of mortgage payments.  On one side is founder and president Millard Fuller’s challenging dictum: “If you’ve got ten homeowner families and you have no payment problems, you’ve selected the wrong ten families.”  In other words, affiliates may not be taking enough risks.  His words are undergirded by Jesus’ message of forgiveness: “Give to those who ask of you;” and “Forgive us our debts as we forgive our debtors.”  Through mercy, relationships are redeemed and new life is born.  Yet on the other side of the line is a legitimate need to responsibly run a business, handle money, administer mortgages and bring reality to the concept of “home ownership.”  Affiliates are called to be faithful stewards of the “Fund for Humanity” so a healthy revolving fund will continue to finance the construction of more houses (Gatlin 2001: 2).

The same source indicates that as of January 2000, total foreclosures for non-repayment in the United States were less than two percent of the houses Habitat built.

            Although a repayment failure rate under two percent perhaps represents a valid balance between giving and stewardship, the failure rate is much higher in, for example, Guatemala.  This suggests that for some areas more giving is needed.  Further, the fact that reimbursement of part of the costs of construction is required at all implies that the model does not work in a subsistence economy where money is little used.  Cooperative building of homes should not be a wedge that forces people into a money economy when, on the whole, they would be better off in their immediate future remaining in a subsistence economy.  One might also complain that Habitat has not done enough to promote the new green sustainable housing technologies.

            Blemishes aside, the work of Habitat and other non-governmental organizations suggests five alternative principles for managing resources to meet needs, which might be called principles for cooperation and sharing:

 

Principle 1.  The principle of production for use.  (Marx’s principle.)  People work on constructing houses, for the purpose of producing houses for people to use.  The logic of exchange and the profit motive, with their endless complications and cruelties, are bypassed.

 

 

Principle 2.  The principle of trusteeship. (Gandhi’s principle.)  Those who possess resources do not possess them for their own benefit, but as trustees for the benefit of the poor. 

 

Principle 3. The principle of volunteerism.  (The unity principle taught by the world’s major religions.)  People volunteer of their own free will to work on houses that other people will live in.  This principle is not always practiced, since sometimes people stop work when their own houses are completed and do not contribute labor to the construction of other people’s houses.    But this is not a shortcoming of the principle, but a sign of the lack of a culture of solidarity, or, in religious language, of conversion.

 

Principle 4.  The principle of the revolving fund.  (Ecology’s principle.)  People are expected to put back in what they take out.  Instead of the money—commodity--money sequence, in which investors put in funds for the purpose of producing commodities, which are then sold so that the investors can accumulate more money, there is a cycle of resource use.  What is consumed is put back for the benefit of future beneficiaries.

 

Principle 5. The principle of local initiative. (Helena Norberg-Hodge’s principle.)  Although Habitat for Humanity is a global network, and although there is transfer of resources from rich areas to poor areas, projects are locally initiated and controlled and are carried out with local resources insofar as possible.

 

            We do not want to insist on these particular principles, nor do we want to exaggerate the benefits to be derived from the activities of non-profit organizations.  Yet we do want to insist that the general sort of thing these principles exemplify is a strategy, a key, a turning point, a conceptual divide.  We have responded to the challenge of presenting an alternative to neo-liberal premises by giving an example of radically different principles that demonstrably work in practice, because houses get built and people who formerly had no houses and could not afford to buy houses now live in them.  Yet having felt a need to be rather concrete and specific to respond to that challenge, and having articulated some principles not out of thin air but out of functioning practices, we now feel a need to say that we do not have a patent on the one right way to do things.[6]  There are many ways to overcome poverty by organizing a community to meet needs.  Many social logics.  Some are new, and some are, as Latin American popular educators say, de rescate; that is, they are old traditions of indigenous peoples that could and should be revived.  Nelson Mandela has said that one of the reasons why he was attracted to socialism was its similarity to the traditional Xhosa tribal practices he knew as a youth.[7]  Many different cultural structures have mobilized resources to meet needs, during many thousands of years of history and prehistory.

            Now that we have made it clear that we do not advocate replacing a single global system (the global economy ruled by the people and principles Ginsberg calls “our new masters”) with another single global system (one ruled by the five principles we have suggested), we want to insist, nevertheless, that there is a single central issue, and that with respect to it, the principles that guide nonprofits and cooperatives at their best are key, crucial, strategic, a turning point, a conceptual divide.  We want to insist that neo-liberalism must be taken seriously.  Its prescriptions are unavoidable, given its premises.  It is of no use trying out this or that economic policy or political strategy within a conceptual framework that accepts the same premises, vainly hoping to do better than neo-liberalism while accepting the same assumptions about human nature, and the same assumptions about the constitutive rules of society.

            This is a short chapter, and it is no substitute for the many books and articles written about South Africa every year.  South Africa has problems A, B, and C, not mentioned in this chapter.  The solutions are D, E, and F, not mentioned in this chapter.  Our claim is a bold one concerning a central issue.  It is that whatever else may be done to diagnose and cure South Africa’s problems, neo-liberalism will continue to be valid; and the remedies that it prescribes will continue to require the sacrifice of the ideals of the Freedom Charter, until different principles, providing in one way or another for cooperation and sharing, play a larger role.

            Albert Luthuli, who was president of the ANC from 1952 until his death in 1967, stated the central issue clearly in the following words:

I do not find myself among those people who tend to reduce all human affairs to questions of economics and economic pressures.  None the less, the basic point at issue in South Africa is the question of ownership.  Because the races inhabiting the country disagree fundamentally on the answer to this question, the whole controversy is hopelessly tangled with racial factors, and on both sides these racial distinctions have become an unavoidable part of the struggle.  One cannot separate the issue of race from the argument about ownership at present, because one race insists on exclusive ownership.  Who owns South Africa? (1962: 86-87).

 

            The expectation was that the abolition of apartheid would bring true democracy, and with it popular sovereignty and therefore a people’s government.  The people’s government would rewrite the rules governing property relationships along the lines envisioned in the Freedom Charter.  The premise would be that South Africa belonged to all its citizens, and that its resources should be put to work to meet the needs of all of its citizens.

            That did not happen.  It is not hard to understand why it did not happen.[8]  What is hard to understand is what the ANC can do now, lacking the means to achieve the goals of the Freedom Charter, having tried to run a grow-and-share economy without much support from international capital and without much success, now facing demands to give up more and more of its ideals in order to make South Africa attractive to investors.

            It is in this context that we suggest that principles illustrated by the work of nonprofit organizations are strategic, key, crucial, and significant as a conceptual break with the mainstream principles that govern the global economy.  Whatever their confessional affiliations, or lack of confessional affiliations, the projects of nonprofit and cooperative organizations can model what Nelson Mandela and the ANC would have done if they had dared, and would have done if they had had the power to do it.  Nonprofits can be the moral equivalent of guerrilla warfare, opening pockets of resistance ruled by responsible stewardship of resources, in a world ruled by greed, waste, and apathy.  Unlike guerrilla warriors, the nonprofits are fighting not as much for power as for principles.  The wider application of principles of cooperation and sharing already used by nonprofits is not just reform.  It is system-changing reform.

            Since we believe that the building of social democracy is not as much a struggle for power as it is a struggle for principles, we might be accused of ignoring the struggle for power, as if it did not matter.  It is true that we do not believe in a dictatorship of the proletariat, or in any dictatorship.  It is true that we do not believe that the consent of the governed obtained by violence or fraud has any legitimacy.  It is true that we consider nationalization to be in most (but not all) instances a crude and ineffective way to transform property rights for the purpose of channeling resources in useful directions.  It is also true that we regard “power” as an overused word, which tends to lump together and obscure facts that should be separated and illumined.

            Nevertheless, power does matter, and the danger that nonprofits will function to mask and preserve domination by existing power structures is a real danger.  On the positive side, some contributions that the work of nonprofits and cooperatives can make to democratic power sharing in society are: first, by facilitating the growth of the skills and the cohesion needed to manage resources, they can increase the probability that the people will acquire resources to manage; and second, to the extent that mobilization of community resources at the grassroots level actually increases a nation’s self reliance, it enables a nation’s leaders to negotiate with the outside world, including international investors, from a position of dignity.  Dignity requires a capacity to be loyal to principles, and some degree of autonomy.  Third, nonprofits can engage in a whole series of practices which go under the names of “empowerment” and “consciousness-raising.”  Fourth, nonprofits can keep alive ideals that can set a standard for the rest of society.

            Supporting, encouraging, or even allowing NGOs (non-governmental organizations) to facilitate self-help among the urban poor and the rural poor requires some unselfishness on the part of the state, its officials, and its civil servants.  The state often favors the formal economy based on capital investment and wage labor because it can easily be taxed.  Supporting the work of tax-exempt organizations among people forced to subsist in the shadows of informal economies is in some important ways contrary to the self-interest of the military, the police, the judiciary, the members of parliament, and all whose salaries are paid from taxes.  Similarly, self reliance in the countryside and in the slums and townships offers less to the staff of the state apparatus than international trade.  International trade moves through ports and airports, and it is fairly easy to skim off a percentage for whomever controls the ports and the airports.   Emphasizing overcoming poverty with what a nation has, as distinct from what it might import or export is in this respect contrary to the self-interest of the state officials who control the interface between the nation and the outside world.  In this respect public servants like Mandela, who did not enrich himself while in office and who gave a substantial portion of his salary as president as donations to nonprofits, set an important precedent, which needs to be expanded to the level of a certain degree of self denial on the part of the entire state apparatus if development is to be inward-oriented rather than outward-oriented.

            To the extent that our suggestions on how to keep Nelson Mandela’s ideals alive tend toward encouraging inward-oriented development, they may conjure up visions of Johan Galtung’s advice to developing nations to “decouple” themselves from the global economy, of Juan Perón’s efforts to keep Argentina out of the International Monetary Fund and the World Bank, of Julius Nyerere’s “Ujamaa” in Tanzania, of Sarvodaya Shramadana’s building of self-reliant rural communities in Sri Lanka and East Africa.[9]  Our comment on these visions of self-sufficiency is that it is not necessary to go to extremes.  Anthony Ginsberg may be right when he says that his country cannot afford to thumb its nose at international capital markets.   But to do what one can to be able to approach international capital markets from a position of strength and dignity is not the same as thumbing one’s nose at them.  To propose that normative frameworks illustrated by the best work of nonprofits can help keep Nelson Mandela’s ideals alive by practicing social democracy at a grassroots level, is not to propose self reliance as the answer to all questions.

            Concerning Nelson Mandela’s central question, as we have formulated it--how to build a  classless society in a nation heavily dependent upon foreign investment--we have proposed an answer, or at least the beginning of an answer, based on what many nonprofit and cooperative organizations are already doing.   It is to put his ideals into practice where it is possible to do so.

 

 

 

 

 

 

 

 

 

 

 

Notes