The ANC’s very own Rocky Horror Show

Neither Ramaphosa nor anyone else in the ANC recognises that the communist-penned National Democratic Revolution is the reason for the current impasse. They do not recognise that the NDR is why everything the state touches in South Africa turns to dust. You could be forgiven for thinking the president and Gwede Mantashe have been listening to the lyrics of the Rocky Horror Show for too long: Madness takes its toll/But listen closely, not for very much longer/I’ve got to keep control…/Let’s do the time warp again/it’s just a jump to the left…They are subjecting us to a failing state-owned duopoly which is  ideologically bankrupt. Their economic world view does not contain the solutions we need, and the ANC and its SACP alliance is useless to us now. A topic Ivo Vegter explores further in this Daily Friend piece. – Sandra Laurence

Second Eskom’ confirms ANC is ideologically bankrupt

By Ivo Vegter*

Ivo Vegter

Cyril Ramaphosa thinks Gwede Mantashe’s proposal of starting a second state-owned power utility is ‘not a bad idea’, or so he told a South African Communist Party conference.

Any sane person, when presented with hard evidence that their strategy is beyond saving, would try a new approach. Not Gwede Mantashe. He looks at Eskom, somewhat jealous of its location in the Department of Public Enterprises, instead of in his own Department of Mineral Resources and Energy, and thinks: ‘Let’s do that again!’

He has proposed a new state-owned electricity utility, to ‘compete’ against Eskom, in the hope that this will reduce the country’s exposure to a failing monopoly and bring down consumer electricity prices. For an energy minister who claims to admire China, Mantashe seems slow on the uptake. His instincts aren’t always wrong – such as when he says Africa should be free to develop its oil and gas resources, or its nuclear power capabilities – but on the big ideological questions he remains what he always was: a dyed-in-the-wool communist.

Lesson from China

A senior member and former chairman of the South African Communist Party (SACP) himself, it is perhaps not surprising that Mantashe cannot see a way out of the country’s energy crisis that doesn’t involve the state. It is perhaps not surprising that he is in denial about the abject failure of just about every state-owned enterprise in the country and the near-total collapse of Eskom itself.

The lesson Mantashe and his fellow-communists ought to learn from China is that the only route to the rapid economic growth required to lift millions out of poverty is to liberalise the market. Much of the progress that has been made in eradicating global poverty since 1980 is thanks to the liberalisation of China’s economy. By contrast, the only continent that bucks the trend of declining poverty is Africa, whose governments remain in thrall to last century’s communist ideal.

Awfully discordant

Every indicator in South Africa points to the collapse of the ‘developmental state’ and the end of ‘state-led growth’. The electricity sector in particular is poised for the entry of an army of private sector power producers, as the state-owned monopoly lumbers on with unsustainable debt, a bloated, inefficient workforce, widespread corruption and sabotage, a politically appointed board, and the legacy of decades of inaction and neglect.

In this climate, Mantashe’s proposal is awfully discordant. He really has come unglued from reality. One might dismiss it as the idle musings of an elderly communist who thinks he could do a better job than his rival in Public Enterprises, Pravin Gordhan.

However, President Cyril Ramaphosa gave the batty scheme a thumbs-up in a speech to the 15th national conference of the SACP, in which he declared it to be ‘not a bad idea’. He said: ‘Comrade Gwede, in dealing with this problem of energy, has said, “President, why don’t we set up another state-owned entity so that we lessen our risks?” And I’ve said I agree with him, because the state must continue to play a key role.’

Chris Yelland, an energy expert, told News24: ‘This is clearly not a solution to our short-term load-shedding problems in South Africa. Have we not learnt that the state is not good at these types of enterprises? They clearly do not have a solution.’

Blame it on the boogie

Ramaphosa listed all the troubles in the world, including colonialism, apartheid, the Covid-19 pandemic, state capture and corruption, the Russian invasion of (sorry, ‘conflict in’) Ukraine, the public violence in July 2021, the effects of climate change, and the energy crisis that lasted over 15 years. All these, he says, and more, are ‘what is holding the growth and recovery of our economy back’.

He did not acknowledge that perhaps the ANC’s economic policies might be behind the lack of growth in our economy and the collapse of our public enterprises. After all, neither is a new phenomenon, and both long pre-date Covid, the Ukraine crisis, the July riots, the so-called ‘effects of climate change’, and even state capture.

The energy crisis has been brewing not for 15 years, as Ramaphosa claims, but for 24 years, when the ANC was first warned it would happen. Throughout this time, it was exclusively the responsibility of the ANC-run government.

National Democratic Revolution

Ramaphosa complimented the SACP for ‘ensuring that the message of communists in our country is spread around effectively’. He thanked the communists for keeping ‘this revolutionary alliance’ among the ANC, SACP and Cosatu firm and resolute ‘in pursuit of our shared program which is the National Democratic Revolution’. (Still, some people claim that the NDR is a right-wing conspiracy theory and doesn’t really exist.)

Ramaphosa assured them that ‘the ANC and the SACP have had a tightly interwoven relationship which spans many decades, and we remain firmly committed to our alliance with the SACP, and we remain convinced that the role of the SACP in advancing the fundamental transformation of our economy and our society is very key to the future of our country’.

And later: ‘I’m sure as communists as always you will have a plethora of ideas and suggestions and I would want to see that coming to the fore because it is from the SACP that we have been able in the past to get great ideas of how we should move our struggle forward.’ (Still, some people claim that the ANC isn’t really communist in its outlook, or that the SACP is the ANC’s intellectual vanguard.)

The summer of ‘69

He referred repeatedly to the ANC Strategy and Tactics document adopted at the first National Consultative Conference of the ANC, which was held at Morogoro, Tanzania, in 1969. Besides committing the ANC to intensified armed struggle, it insisted that the country’s wealth and resources must be ‘at the disposal of the people as a whole and… not manipulated by sections of individuals’.

Communal ownership and wealth redistribution were recurrent themes of Ramaphosa’s talk, and he said that ‘the time has now arrived’ for an ANC/SACP/Cosatu summit to discuss how to achieve these goals, and how to determine the roles of the public and private sectors under a government responsible for ‘planning and guiding the development of the economy towards sustainable growth’. (And still, some people claim that the ANC has changed, and no longer clings to the outdated socialist doctrines of 50 or 60 years ago.)

Neither Ramaphosa nor anyone else in the ANC recognises that the communist-penned National Democratic Revolution is the problem, not the solution. They do not recognise that government ‘planning and guiding’ has led us to this impasse. They do not recognise that the NDR is why everything the state touches in South Africa turns to dust. The NDR is not the glorious revolutionary future. It is the dysfunctional past that led to our catastrophic present.

Dog whistle’

Carol Paton, writing for Fin24 (paywalled), says that the ‘second Eskom’ proposal is merely a ‘dog whistle to the left’.

Recognising the inevitability of energy market liberalisation, and the severe fiscal constraints on the state, she concludes that Ramaphosa couldn’t have been serious, and ‘is really just someone who tells everyone what they would like to hear’. She ignores the context in which the idea about a second state-owned power utility was an example, however. 

Ramaphosa said: ‘There are some that have urged us to make a choice between a developmental state that drives economic and social transformation, and a vibrant, expanding private sector that fuels growth and employment.

‘Just as we recognise the role of business in creating employment we should not diminish, yes, the central role of the state in coordinating in planning, in guiding, in enabling the development of the economy. And, yes, in setting up companies, state-owned enterprises, through which it will foster the employment of our people. …

Yes, if the state is to effectively support growth and development as envisaged in [the ANC’s 1992 document] Ready to Govern, then it needs to have sufficient capital, skills, and must highlight the use of technology as one of the key enablers in the modern times. It needs to be efficient. It also needs to be innovative. But it also needs to be competitive, even if we will have state entities competing against each other.’

At this point he cited Mantashe’s idea as an example.

It wasn’t just a passing thought. Ramaphosa couched it in the context of a large, cocontrolling state operating many state-owned enterprises competing against each other. The duplication is intentional, in the belief that the state can somehow mimic private-sector competition among its state-owned enterprises, and play a core role in economic activity and job creation.

That Ramaphosa believes all it would take is for the state to be sufficiently skilled and capitalised, and to be efficient, innovative and competitive, is his blind spot. One cannot just wish such a state into existence, and a government can never be as efficient, innovative and competitive as the private sector. Nice to see that he realises the utility of technology, though. He truly has arrived in the second half of the 20th century.

Blowing smoke

Ramaphosa vehemently denied any intention of privatising parts or all of state-owned enterprises, before giving this explanation of the ‘second Eskom’ plan:

‘The reforms we are undertaking in the energy sector provide a good illustration of the approach that we need to take. Our national utility, Eskom, has not only been in a state of distress, not only for the past three or four years, it’s been in distress for easily 15 years, but it has been operating according to a model that is no longer suited to the technology or the economic conditions of the present.’

(One wonders, then, why the ANC government, as sole shareholder, did nothing to change that operating model 15 years ago.) ‘For the past 100 years, Eskom has operated as a monopoly; as a single company responsible for the electricity generation, transmission and distribution. … One company, which, if it fails, becomes a spectacular calamity for the entire country.

‘Now that is the risk that we have. If we look at other countries, like China for instance, it has a number of state-owned electricity generating companies that even compete amongst themselves; compete amongst themselves to even bring prices down. And that is a future that I think we should begin to imagine. …

For much of its history, this model that we have pursued has worked but we are today witnessing the great risks associated with placing sole responsibility for electricity generation in one company, and that is why, when comrade Gwede flighted the idea of saying why not a second one which can be owned by the government and I said I think that’s not a bad idea.’

He mentioned the notion twice, and elaborated in great detail why it would be a good idea, and how South Africa should follow the example of China’s multiple state-owned energy companies.

These aren’t the words of someone who was just blowing smoke up gullible communists. These are the words of a committed comrade advancing the National Democratic Revolution, which the SACP’s leader for the past 24 years, Blade Nzimande, described as ‘the most direct route to socialism’.

These are the words of the socialist that Ramaphosa has always been, as I wrote when he became president in 2018.

Failing duopoly

The ‘tsunami of market liberalisation’ that Paton anticipates is not the policy course the ANC is on, and this Mantashe/Ramaphosa whimsy is not just playing to the ‘communist crowd‘. Liberalisation is happening despite the ANC, out of necessity, because the state is failing so badly that it has no other choice but to beg the private sector to rescue it.

The ANC, which has always been under the tutelage of the SACP, is intent on turning the ship of state around and leaving this embarrassing period of state failure behind them. It does not realise that it’s on the rocks.

They – Ramaphosa included – still believe that a large state and a ‘vibrant private sector’ can operate alongside each other. They do not accept that a large state first stifles and crowds out private business, and then, inevitably, fails to deliver on its promises of economic growth and job creation. They dream of an efficient, capable state, despite all evidence that such a state cannot exist.

If it takes you 15 years after the lights go out (and 24 years after you were warned) to realise your business model isn’t working, the only way you could still exist is as a heavily indebted, failing, state-owned enterprise. And only a deluded socialist would respond by establishing a second state-owned enterprise to, magically, fix the problems created by the first.

In the private sector, you’d have been dead and buried within the year, so the misallocated capital can be redeployed into the more capable hands of your more successful rivals. This mechanism is what keeps the private sector efficient, innovative and competitive. This mechanism is what is entirely lacking in the public sector. The state cannot mimic private sector competition, even if it wanted to, because there is no market to reward it for success and punish it for failure.

Instead of a failing state-owned monopoly, all Mantashe and Ramaphosa are proposing is to subject us to a failing state-owned duopoly. They are ideologically bankrupt. Their economic world view does not contain the solutions to the electricity crisis. The ANC and its SACP alliance are useless to us now.

  • Ivo Vegter is a freelance journalist, columnist and speaker who loves debunking myths and misconceptions, and addresses topics from the perspective of individual liberty and free markets. Follow him on Twitter, @IvoVegter.
  • The views of the writer are not necessarily the views of the Daily Friend or the IRR. If you like what you have just read, support the Daily Friend.

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