THAT the far left Economic Freedom Fighter’s leader Julius Malema has absolutely no clue on how the economy works is best illustrated by his recent comments that ‘nationalised banks would run themselves, and without focusing on maximising profits, would keep their interest rates low so that all South Africans could afford a house and car.” While not going so far as abolishing the central bank or putting an end to usury, Malema sees low interest rates and nationalisation as key factors in ending neoliberal profiteering and the market economy in a heady mix of Marxist rhetoric drawn from failed experiments in state capitalism that saw the collapse of the Soviet Union and Eastern Block states nearly 25 years ago.
The EFF party manifesto is full of Marxist bluster, calling for the end of private companies and the expansion of the state from its caretaker role, to a more aggressive socialist platform that would essentially result in all forms of economic activity falling under the state purview, with the immediate consequence being the end of individual entrepreneurism.
That state capitalism is enormously bureaucratic and inefficient can be seen in South Africa’s ailing parastatal sector. Both Telkom and Eskom have been beset with problems regarding lack of competition, inefficiency, and inability to cater to consumer demand, with the result these state run corporations are only sustainable via huge bailouts funded by the treasury.
Telkom posted one of the biggest non-mining losses in the South African economy this year with a 11.6 billion rand write down. The net loss for the year through March compared with 216 million rand a year earlier.
Eskom’s losses are even more startling. The parastatel made a loss of R10.7bn through supplying electricity to Hillside, the bigger of the two aluminium smelters at BHP Billiton and is heading towards a R350bn debt trap. Making losses and providing bailouts to the parastatal sector are the exact kind of thing which Julius Malema and his brand of Malemanomics advocates — it is thus difficult to see any real ideological difference between the current administration and the EFF party, suffice to say that the aegis of parastatals would be increased while individual businesses would be contained, if not abolished.
Instead of ending South Africa’s ‘dirigiste’ experiment with state corporations and the abuse of state capital with the resulting enormous drain on the nation’s coffers, perhaps by providing alternatives such as cooperative and local economic solutions, and an unconditional basic income grant, the EFF seeks to up the ante by embracing the kind of mega-projects and foolish statist policies that reduced East Germany to a drab grey as the country failed to develop economically under Erich Honecker.
Another parastatal, SAA was bailed out to the tune of R550 million this year alone, and while the national airline marquee may bring pride, it certainly does not bring profit. The SA Post Office suffered a net loss of R179 million.
Clue to the thinking behind Malemanomics is the belief that the profit motive is behind South Africa’s super-exploitation of labour. Seeking to address the enormous disparities in income between the lowest paid worker and the highest paid corporate executive, Malemanomics with its logic of retribution and redistribution, would essentially end private ownership of property, turning all land over to the state and ending the willing buyer, willing seller principle. If this doesn’t turn every South African citizen into a tenant of the state, then the party’s lurch to the left could bring the kind of Zanu-PF rule that characterised the collapse in the Zimbabwean economy under Robert Mugabe.
Despite this statist orientation, it is unclear whether Malema will actually go ahead with any of his plans or be able to sustain his own rhetoric and party platform.
“An entrepreneur must be able to do business no matter who is in government. A real businessman doesn’t lose sleep over whether the [National Party], ANC or EFF is in power”, says the former ANC youth leader.