Hot air Moeletsi fails to impress

The following is an interview by Mail and Guardian with Moeletsi Mbeki, entrepreneur and brother of previous SA president Thabo Mbeki, at the launch of Moeletsi's book Architects of Poverty (Picador) at the Cape Town Book Fair. It is a "critique of African capitalism, describing how the powerful elite on the continent 'sell off its assets to enrich the rest of the world'."

From this interview it would appear that while Moeletsi Mbeki has an idea why capitalism has not worked well in South Africa, he has very little insight into economics and how capitalism does work.

What comes across is the perception of the extent to which the ANC tried to copy the old regime's tactics instead of coming up with anything progressive and innovative of its own.

Nor does it seem that Moeletsi Mbeki can come up with any solutions to the problems that South Africa faces. The impression is that of a disgruntled relative of a president out of power and out of favour who now faces criticism on his own turf.

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Moeletsi Mbeki argues that the "slave trade or oil trade is known as mercantile capitalism" - an earlier form of capitalism in which one "buys cheap and sells dear". He says Africa is "still locked in the mercantile stage of capitalism". (Not so. Telkom buys dear and sells cheap.)

You seem to be disillusioned with African nationalism.
The book is a critique of nationalism. There's a contradiction at the centre of nationalism. Nationalism sets out to defeat its perceived enemy. (No, nationalism seeks to defend its people from its enemies. When the nation's leaders are its enemies, nationalism fails.) But it sees the enemy's way of life as its model. This is the contradiction of nationalism. Afrikaner nationalism hated British imperialism. What did it do? It went on to emulate British imperialism. [Likewise] the ANC saw Afrikaner nationalism as its enemy. But what has the ANC done? It set out to emulate, through black economic empowerment, white capital.

Look at the massive salary differences between the ANC officials in government and the masses. In South Africa we now have deep inequality among Africans. This is because of the attempt by black nationalists to live like the enemy. By emulating their enemy, they inherit the contradictions of the social system they take over.

What were the limitations of colonialism?
Colonialism didn't create industrial economies. (Disingenuous. Colonialism didn't create industrial economies, it imported them.) But the African nationalists have destroyed what little industry there was. Look at Zimbabwe, Zambia and the Democratic Republic of Congo. When Zimbabwe became independent it had a fairly thriving industry. Today the industrial sector has collapsed.

But wasn't the strain to Zimbabwe's system first felt in the late 1980s because Robert Mugabe's government was expanding a social infrastructure originally meant to serve a few hundred thousand whites?
There would be no strain if there were other investments. What hospitals were built in Harare since independence in 1980? None. Parirenyatwa [the country's main referral hospital] was there before 1980; Harare Hospital was built before 1980; the Avenues Clinic was built by the private sector. There were no new hospitals built but more people were expected to use these facilities. There was just consumption, instead of investment.

Frantz Fanon railed against the unproductive bourgeoisie of newly independent countries. But these nationalists are not a bourgeoisie. They have no capital like a typical bourgeoisie. They don't create wealth; they are a parasitic elite that lives off the existing assets which they didn't create. (Because they had these assets handed to them on a plate. There was never any understanding of wealth creation, only wealth dissipation.)

It is the same with the BEE tycoons in South Africa. They are living off the assets handed to them by existing companies. They are not a bourgeoisie; yes, they are wealthy but they are not capitalists. (They are neither bourgeoisie nor capitalists, they are freeloading communists.)

In the third chapter of your book you write about de-industrialising South Africa.
That happens when you are consuming and are not investing. About 70% of South Africa's GDP goes into private consumption. By comparison about 40% of China's GDP goes into consumption. The rest goes into investment. If you compare China and South African you can see why China is creating jobs.

For instance, in 1985 78% of footwear sold in South Africa was made locally; now 83% of shoes sold in South Africa are made in China. (The fact that more shoes were made locally in South Africa in 1985 had more to do with sanctions and the need for import substitution than competitiveness.) In just 20 years we have witnessed this collapse of our industry.

In employment figures it's like this: in 1997 23 000 people were employed in the footwear industry; this figure has dropped to 10 000. We no longer make our shoes; we are now importers. And shoe manufacturing is not a high-technology industry. (No, but neither is fine jewellery design, which we don't have here either.)

Are you saying South Africa is travelling on the de-industrialising path of most African countries?
If it carries on this way, it is headed the way of all African countries. That's why South Africa is not classified as part of the Bric group of nations [Brazil, Russia, India and China]. South Africa is not one of those countries because it's going backwards. It's de-industrialising.

What makes South Africa appear to be growing is the price of minerals. The price of minerals has gone up because of the industrialisation of Asia and that makes our GDP look as though the country is growing. Of course, the GDP is growing in money terms because a ton of coal that was, say, R10 is now selling for more. But we are still producing the same quantities.

Most jobs have been created in the security sector (because of crime), shop assistants (because of low skills), warehousing, finance and construction. Manufacturing is now the third-biggest employer behind trade and government services. The growth of retail means we are consuming a lot. We have more shop assistants selling shoes made in China.

Where are the entrepreneurs?
The people who should become the new entrepreneurs are working for the government. (Those parasites wouldn't survive for a week in the private sector.) Some of these make more money by being corrupt in government than they would make if they were actually running businesses. Government pays them huge salaries. Why then should they take the risk of being entrepreneurs? If the government will give you a huge salary for shuffling papers in a government office, why leave? (Most government officials do not in fact earn huge salaries. They make undeclared money on the side throught their contacts.)

A director general in government earns about R100 000 a month; a mineworker gets R3 000 a month. But in China a DG doesn't earn that much. I once asked a locomotive factory manager who employed 10 000 people how much he earned. He said he was earning R300 000 a year.

What should South Africa do?
We need to put more money into education. China, for instance, produces 600 000 engineers a year. Look at the number of African chartered accountants. In the past 15 years we have trained 1 000 CAs, (is that all??) but a substantial number of South Africa's black CAs were not trained here. (They are recruited from Zimbabwe, Zambia and Ghana, but this is just a trickle.) This country is not training its [workforce]. We think we can live off our mineral wealth.

But a lot of money is being invested in education.
Yes, but most of the education budget is a social welfare budget. Look at the huge drop-out rates at high school and university. There should be discipline among teachers and students. And why should students make an effort to study when they can sit at home and receive grants from the government? (What is really lacking is well trained, motivated teachers.)

Hasn't the government put money into infrastructure?
Our infrastructure isn't functional. That's why trucks carry goods from Johannesburg to Cape Town -- because there's been no meaningful investment in the rail network. The average age of a railway wagon in South Africa is 40 years.

But the government has invested in the Gautrain.
The Gautrain is transporting the elite from Sandton to the airport. There's nothing productive in that. There's already a train from the airport that goes to central Johannesburg, but the elite didn't want to use that and so they built their own. This is not an investment; it's part of consumption. It looks like an investment but it's not.

What about the public infrastructure programme that came as a result of hosting the World Cup?
It's very temporary and most of it is in construction. Once you have finished building a stadium, the people are back in unemployment. This is not sustainable employment. This is an artificial boost to employment.

To what extent is the retail boom in South Africa linked to the meltdown in Zimbabwe that blunted the competitive edge of most of its companies?
Zimbabwe has become a bantustan of South Africa. The Mugabe regime has destroyed the productive capacity of Zimbabwean companies. Zimbabwe exports labour to South Africa, whether legal or illegal; that labour sends money to Zimbabwe and then the country sends its goods to Zimbabwe. With the money sent by Zimbabweans working here, those in Zimbabwe buy South African-made goods and the money comes back. That is how the bantustan system worked. (Blame it on the legacy of apartheid.)