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MARIKANA AND THE EXTERNALIZATION OF CAPITAL IN THE SA ECONOMY

By Hadebe Hadebe

Graphic: Backyard Online 2020

It has been exactly nine years since the workers were brutally killed in Marikana. And what is concerning even to this point is that there is no clear, cogent or understandable explanation that has been provided to describe the underlying causes, except that forty-four people lost their lives and many others injured. As the families of the slain workers and probably South Africa at large wait, it may be necessary for one to re-open this unfortunate part of this country’s history in relation to the hold capital has over the country and its people.

Among many reasons given is that tensions between rival trade unions, Association of Mineworkers and Construction Union (AMCU) and National Union of Mineworkers (NUM), precipitated the tensions that led to the deaths of many workers. Again, this is just a tip not an iceberg because this explanation does not give a clearer picture on why the situation worsened. In the public service and other sectors of the economy, different trade unions exist side by side without violence. What could be so different about mining then?

South Africa was founded on its mineral endowment, starting with gold and diamonds in the mid-1800s to platinum and other high-value minerals today. For many years, the mining industry was ruthlessly controlled and concentrated in the hands of not more than four players. Anglo-American was the biggest company that not only made the South African economy to tick, but it also captured the legislative framework for mining. The Chamber of Mines set the policy on behalf of the apartheid government.

Writing for The New York Times (1983), Joseph Lelyveld estimated Harry Oppenheimer’s wealth at USD 15 billion. Lelyveld added that if South Africa were Saudi Arabia, Oppenheimer “would qualify as head of the House of Saud.” As such, the mining industry propped the apartheid regime and directly benefited from its racist laws that oppressed black people. At the same time, Oppenheimer excelled in displaying uncontested contradictions, as Marxists would argue, in claiming that he opposed the apartheid system while simultaneously reinforcing its racist policies. Oppenheimer therefore maintained a double agenda as a way of maintaining and growing his wealth.

It is for this reason that former apartheid president PW Botha and the Nationalist Party (NP) detested the power the Oppenheimers had over the government. The nationalists decried ”British-Jewish capitalism” and the tensions were evident throughout. However, the NP learned to depend on the Oppenheimers “to save them from the economic consequences of their own policies.” This is truer especially after the killing of unarmed blacks at Sharpeville in 1961 massive flights of Western capital left South Africa. This event threatened the very existence of the apartheid state. It is the enormous capital resources of Oppenheimer’s Anglo American Corporation that saved the day.

This was on the back of Anglo American Corporation’s newly amassed fortunes following its development of a new gold field in the Orange Free State a decade before the Sharpeville massacre. This money assisted South Africa to slowly recover from an almost certain collapse, and to set the country in a path of becoming a sophisticated industrial state. To prevent Anglo-American from also taking its money to overseas markets, the regime decided to introduce macroeconomic measures to keep the company invested in South Africa.

Not that Anglo-American had any other way; the government had imposed stricter financial exchange controls on the country to avoid more capital flights. So, the company was forced to re-invest its huge profits in the South African economy. Anglo-American also decided to diversify beyond mining. In an article ‘South Africa’s jumbos head north’ (1998), the British publication The Economist states, “In the early 1980s, before gold sank and the company started to divest, Anglo-American accounted for more than half the market capitalisation of the Johannesburg bourse.” It is clear that Oppenheimer, according to The New York Times, had “personified the one power center the Government party has never quite managed to dominate.”

The existence of mining in South Africa kept the country relevant to the West. Using their powerful economic position, the Oppenheimers assisted apartheid to maintain firm links with the external world in spite of the economic sanctions imposed on the state for its racial policies. In 1993, The New York Times reported that “Oppenheimer more than anyone else has managed to preserve and strengthen the economic ties binding Johannesburg to Western financial centers.” This explains that mining was insulated from politics of the time and its profits bankrolled “crime against humanity”, as United Nations characterized apartheid.

If one looks at the economic sanctions imposed on Zimbabwe and Venezuela today, one would imagine that Oppenheimer would be banned together with apartheid ministers. However, the truth is that the West had a different kind of sanctions against South Africa, even though many people would refuse to admit. One academic named Chester A. Crocker once said of South Africa: ”That country is by its nature a part of the West. It is an integral and important element of the Western global, economic system.” Indeed Anglo-American played its part, and was duly rewarded with a listing in London after apartheid ended. Ordinarily, it should have accounted for its heinous crimes, which included mass exploitation of black workers and for enabling the apartheid.

Anglo-American played a key role in the choreographed unbanning of the liberation movements and in shaping the present dispensation for its selfish ends. Oppenheimers ruled and decided on the future of South Africa, not the Afrikaners as mainstream ideas suggest. Harry Oppenheimer dined often in the residences of African Presidents, such as Zambia’s Kenneth Kaunda and Tanzania’s Mwalimu Nyerere. He also exchanged ideas with former US secretary of state Henry Kissinger. It is interesting that when Nelson Mandela was released from prison Oppenheimer ‘fathered’ him. Wits University’s Roger Southall suggests that Mandela forged strong relationships with both Oppenheimer and Clive Menell, vice-chairman of the rival Anglo-Vaal mining group.

 According to Southall, “Just as the ANC was unable to overthrow the political, so it was unable to overturn the economic order.” Anglo-American continued to dominate the country’s economic landscape and is said to have also dictated the democratic state’s economic policy. Late economist Sampie Terreblanche asserted that from 1990 Nelson Mandela, Oppenheimer and other corporate leaders held secret negotiations on the future of the economic policy of South Africa. Unsurprisingly, the outcome of these negotiations resulted in three key macroeconomic policy decisions: South Africa’s accession to the World Trade Organisation (WTO) as a developed nation, floating of the currency, adoption of a flexible exchange regime.

As to be expected, trillions of dollars promptly left the country when major corporations, including Anglo-American, delisted in the JSE and moved their headquarters overseas. The Minerals Energy Complex (MEC) won the day. Oppenheimers deliberately withdrew the company from South Africa to create everlasting chaos. Anglo-American operated from the premise of a ‘strong man syndrome’ – the vacuum it left cannot be filled by anyone. Labour peace and relationship with the state were forever lost because of Anglo-American’s decision to discard South Africa as its primary headquarters and base. When the company left, it said it wanted to be closer to its founders and to be in an accessible position for its newly created markets in Latin America and other parts of the world. What was suspicious about this move is that Nestle remains a proud Swiss company even though it barely generates 2% of its revenue from Switzerland.

The clarity of the larger strategy at play only became evident with the macroeconomic policies that the post-apartheid state adopted to assist the large companies to depart South Africa. South Africa had to be withdrawn from the Western sphere of influence and be integrated into Africa once more, politically speaking at least. The looting of its capital and resources was kick started in earnest from the early 1990s, a period which coincided with global capitalism. The black majority in South Africa was not given time to deal with the long effects of apartheid and colonialism but it was immediately dragged into uncharted waters of global politics.

After the democratic elections, the finance portfolio continued to be under ex-apartheid minister Derek Keys and the South African Reserve Bank (SARB) under another ‘verkrampte’ Chris Stals. The two men worked tirelessly in taking the country’s macroeconomic policy to an undesired direction. Among many of their actions, they decided to scrap the Currency and Exchanges Act of 1933 and pushed for the adoption by the SARB of what is called ‘flexible exchange controls’ – to facilitate capital flights out of South Africa.

As mentioned above, it was in this period that South Africa witnessed a mass exodus of large corporations to list and later relocated their headquarters to either London or New York. These included Anglo-American, South African Breweries, Dimension Data, Old Mutual and recently Naspers.

When Anglo-American left the country, there are a number of things that happened. The Chamber of Mines lost its mojo! The mining industry was fragmented into many companies and more external players moved in. Essentially, South Africa became a much more organized Democratic Republic of Congo wherein different countries simply move in to extract the ores to support their growth strategies and leave the local economy hapless.

Strategies such as the Raw Materials Initiative (RMI) of the European Union place South Africa very high on the list due to its platinum and other resources. It is not a coincidence that the likes of Anglo Platinum and Lonmin have headquarters in London.

In addition, the much talked about 5G technology places South Africa in a much more precarious position than ever before. The demand for input minerals such as rare earth elements and others that are found in abundance in South Africa puts the country in the firing line of international geopolitical competition between large economies, especially China and the West under the United States.

British capital therefore serves as the destination for monies made in South Africa while at the same time facilitating the supplies of the raw materials to different parts of Europe and other parts of the world. In terms of global tax conventions, companies have the right to repatriate their profits to the country in which a corporation is based.  

However, in practice many companies choose not to repatriate their offshore earnings to their places of origin because they want to avoid corporate taxes on the repatriated funds. It is not a coincidence that South Africa prominently featured in the Panama and Paradise Papers. All money generated from mining in South Africa and the rest of the continent is stored in tax heavens while people die of hunger, starvation and poverty. The condition of a South African mineworker has not improved even with democracy. Marikana aptly summarizes this in not so many words. A company like Lonrho plc, former owners of Lonmin, therefore has no need to feel and behave South African because its sole purpose is to mine platinum, and send it abroad in raw form.

For example, this scheme is spearheaded through the EU’s Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH) programme that restricts imports of processed minerals to its member countries. Therefore, beneficiation of minerals will never take place in South Africa at a large scale as that would threaten supplies to industrialized nations. The likes of NUM and the African National Congress (ANC), through their proxies, understood these dynamics quite well since they have representation in the boards of many of these companies. Dividends and rents are what matters to them more than anything else. Joseph Mathunjwa and AMCU were probably dissatisfied and no longer prepared to exist in the sidelines. Workers too could spot the bigger problem and started to resist NUM as the kingmaker in the mining industry.

In essence, NUM served as a gatekeeper rather than a workers’ voice in as far as negotiating better employment conditions for workers who live in abject poverty. It comes as no surprise to learn that NUM was a project of the Oppenheimers, who in the late 1970s embarked on reshaping the South African society and economy through an initiative called the Urban Foundation. Academics such as Patrick Bond have written extensively on the Urban Foundation, which positioned itself as a developmental and transformation agent in the South African society. In parallel, the Wiehahn Commission of Enquiry in 1979 urged the government to grant all South African workers, irrespective of race, labour rights including recognition of black workers and the unequivocal right to join trade unions. Although labour rights are intrinsically linked to political rights, they were artificially separated in the same way the Oppenheimers created a parallel state.

Nonetheless, the externalization of capital in mining makes companies pompous and to therefore refuse to negotiate in good faith with trade unions. Flexible exchange controls introduced in the 1990s assist companies to move money out of the country at lightning speed. Hence, the insistence on foreign direct investment (FDI) remains suspect. Carriers of FDI in large foreign companies see no need to respect laws of host countries because their objective is to take as much money and minerals as possible. Nobody has power to tell them what to do. Hence, the living conditions of workers in Marikana and other mining areas leave a bitter taste. Lonmin’s failure to implement social labour policies in Marikana and surrounding communities could have triggered more demands for better pay by the workers.

Marikana 2012. PIC: Felix Dlangamandla

The only reason the apartheid government was able to industrialize, it had the capital of Oppenheimers and the backing of the West, which gratuitously donated technologies to Eskom and Sasol. The over financialisation of the South African economy is deliberate to allow external powers to defraud the country through mining. Germany, Japan and others, for example, have not abandoned their lucrative manufacturing sectors. Instead, weakened countries like South Africa are told to focus less on manufacturing and to adopt incongruous things like the Fourth Industrial Revolution in order to get ahead without explaining the modalities.

The present indicates that South Africa’s future hangs in the air and its economy is controlled elsewhere. There is no hope that any of the large companies would be prepared to carry the post-apartheid state on its shoulders as Anglo-American did from the 1960s until its demise in the early nineties. The relocation of capital in the post-apartheid period plus rampant practices of cash hoarding, also called the ‘investment strike’, have ensured that economic growth would never ever breach the 3% mark any time soon. Furthermore, unemployment will continue to rise in an economy that produces barely anything. Value-addition is least prioritized in favour of manipulative financial markets.

It is a myth that mining is a sunset industry in South Africa. The country still have significant deposits of different minerals that industrialized nations have ring fenced for their future through different methods such as automation, climate change and nature conservation. Based on the old adage, ‘if it’s not mined, it is grown’ large industrial countries understand that their privileged economic position would be lost if they gave the likes of South Africa the opportunity to derive benefits from their mineral wealth. The occurrence of Marikana therefore helped to draw the line in the sand in order to warn labour of the consequences from their actions. South Africa has to create money and produce minerals for powerful external forces; no one is permitted to disrupt this.

Based on this, it is unlikely that South Africa will ever experience a prolonged industrial action in the mining sector again. Among others, AMCU itself understands this now. Security of mineral supplies by industrialized nations means undermining laws of mineral producers such as South Africa, Zimbabwe, DRC and Venezuela, with the help of internal proxies. Hence, rentier capitalism is the main feature of places like South Africa.

When he addressed the 17th Nelson Mandela Lecture took place in 2019, Chief Justice Mogoeng Mogoeng aptly summarized the unfortunate direction the democratization in South Africa has taken to date. He said those who were previously oppressed stand along those who oppose transformation and enforcement of the constitution. His view is that individuals would rather celebrate their directorships and free shares as well as being set up in businesses at the expense of all what the constitution is about. In his book ‘The Corruption of Capitalism: Why Rentiers thrive and Work does not pay’ (2016), Guy Standing asserts, “‘Rentiers’ of all kinds are in unparalleled ascendancy and the neo-liberal state is only too keen to oblige their greed.”

It is an open secret that powerful capital incorporates political classes into their ranks to frustrate the change that will assist South Africa to reverse the damage created by over four hundred years of misrule by European colonizers and their descendants. Political capital that some “firebrands of yesteryear” bring with them to companies cushions capital from scrutiny. That is the reason Lonmin, now owned by Sibanye, continues to operate in the platinum belt as if nothing happened. Lonmin exports the money and minerals while black workers have to keep up with poverty, dirt and filth in the sidelines of opulence and wealth. The social, economic and political problems engulfing South Africa today are part of a well-crafted script that was penned many years ago. Its masterminds manipulate it from the faraway lands.

American author John Perkins, in his book ‘Confessions of an Economic Hit Man’ (2004) refers to these mysterious actors as the “economic hitmen” whose role is to distablise countries for their selfish ends. South Africa has been a subject for a tug-of-war between global powers for many decades to date. An occurrence such as Marikana and other events are a function of global geopolitics. Nobody will take responsibility through, not only compensation, but also by giving a full account of why African workers were killed in cold blood in 2012.

Human life is exchanged for economic rents.

What is important to understand though, externalization of capital (illicit capital flows and other economic treachery) occurs with the blessings of ‘firebrands of yesteryear’, wherever they are now. There is little regard for the political ideals that the country’s black majority hoped for throughout the colonial and apartheid periods. Unfortunately, this is happening across all sections of the South African society and economy. It is for the reason such things as land and economic transformation are vehemently opposed in fear that foreign interests (investors) would be disrupted. If the interests of the external powers get threatened anytime in future, another Marikana is certain to happen again in our lifetime.

Siya yi banga le economy!

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